More people are trying to figure out ways to find every penny possible with gas prices constantly breaking record highs, inflation at levels not seen in four decades and the what seems to be an inevitable recession around the corner.
You may be someone who has as much money withheld from your paycheck as possible in hopes of a big refund at tax time. The Internal Revenue Service has a tool it says can help you take more money home now and get close to zero in terms of what you owe, or get back next spring.
It’s called the tax withholding estimator.
“So come tax time, you don’t have a big swing refund one way or owe a bunch another way,” said IRS spokesman Raphael Tulino. “It gives you a chance to really get it as close as possible to zero, which can keep money in your pocket throughout the whole year and give you a chance to pay only what you owe based on your taxes when it comes to tax time.”
Tulino said the estimator will ask a lot of questions including any credits or deductions you are expecting to help you get that number as close to zero as possible.
He does have this caveat.
“It’s not going to be exact. Few people get it to zero,” Tulino said. “But it does take into account, and will give you the chance to take into account, everything you have financially based taxes to give you something in the arena that you want in the end.”
The process takes about 20 minutes. Tulino said you will need certain documents at the ready such as pay stubs in order to accurately fill out the estimator.
It will also ask you common questions you might normally answer on a tax return including your filing status, if you have a claimed dependent, 401k and HSA information and more.
It will not ask for personal information such as your name, your social security number or bank account numbers.
Tulino says that the earlier in the year you use the estimator, the better. That’s because the closer you get to the end of the year, the harder it is to make a difference in your take-home pay that will also get you to zero at tax time.