![]() The tax law, like almost all laws, grows as lawmakers use it for pork, try to make it fairer, use it to stimulate a sector of the economy, or just want to raise revenue. About 70 percent of taxpayers withhold too much for federal income taxes every year, the agency reported.įorm W-4 and return it to their HR or payroll department to withhold the correct federal income tax from their pay.Click here to see the latest IRS Form 1040. "Proper withholding adjustments help people boost take-home pay rather than be over withheld and get it back as a tax refund," the IRS advised. In other cases, it can help employees with additional income sources to see if they should withhold more or make an estimated tax payment to avoid a tax bill when they file their tax return. Tax Withholding Estimator, also available in Spanish, can help employees determine if they have too much federal income tax withheld, reducing their take-home pay. IRS Urges Employees to Check Tax Withholding The standard deduction also ensures that only households with income above certain thresholds will owe any income tax. Taxpayers can claim a standard deduction when filing their tax returns, thereby reducing their taxable income and the taxes they owe. "This is the largest automatic adjustment to the standard deduction since core features of the tax system were first indexed to inflation in 1985,"
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