25 May 2011

HOW DO I ADJUST MY WITHHOLDING – FROM MY PAY CHECK?

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Publication 919 How Do I Adjust My Tax Withholding? updated:  There is now a 2011 version of Publication 919, How Do I Adjust My Tax Withholding?, on the IRS website located at http://www.irs.gov/pub/irs-pdf/p919.pdf. Employees use this publication to help them determine if their federal income tax withholding is sufficient, and, if necessary, to prepare a new Form W-4 to adjust their withholding. The publication includes worksheets to help employees estimate their 2011 tax liability (Worksheets 1 and 2), and to compute withholding (Worksheet 7). The IRS advises employees to check their withholding if they had a lifestyle change (such as a marriage, divorce, birth or adoption of a child, purchase of a new home, or retirement) or significant changes in their income or itemized deductions. There is a good chance that employees are not having enough tax withheld if: (1) they have more than one job at a time; (2) their spouse also works; (3) they have income not subject to withholding, such as capital gains, rental income, interest, and dividends; or (4) they owe other taxes, such as self-employment tax or household employment taxes. Form W-4, line 6, is used to request additional withholding. Adjustments to withholding allowances are made on Form W-4, line 5. Employees must complete a new Form W-4 to adjust their withholding within 10 days of any event that decreases the number of their withholding allowances.

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