To use the calculator, you’ll need your most recent pay stubs and most recent income tax return. Your completed 2017 tax return will help you estimate your 2018 income to expedite the calculation. If you’re self-employed or likely to have income swings later in the year, you’ll probably want to revisit the calculator again later in 2018.
The goal, though, is to set up your deductions so you don’t overpay taxes or get a refund next year ― something that roughly 75 percent of Americans currently receive.
The IRS is not terribly interested in getting more people to break even on withholding if they like getting a big check every spring, said Mark Mazur, director of the independent Tax Policy Center and a former tax official with the U.S. Treasury Department.
“People seem to like to get about the same refund year after year,” Mazur said. “They seem somewhat surprised when things are different.”
And ultimately, the burden of estimating how much a taxpayer will owe in taxes falls to the taxpayer. All salaried workers must submit a W-4 form to their employer that authorizes the amount of money (in the form of allowances) that they want taken out of their paychecks to cover their tax obligation. The flip side of overestimating what you will owe is underestimating it, which could result in getting slammed with a hefty tax bill when you file your return.
