As of March 18, the Internal Revenue Service had issued more than 63 million refunds with an average refund of $3,004.
The larger the tax refund you receive, the more money you’ve paid throughout the year because your withholding does not accurately reflect the tax you owed. Of course, there are some exceptions, such as special tax credits, that may be the cause of a larger refund. On the other hand, you could have owed tax when you filed your tax return this year. Either way, it may be time to evaluate your tax withholding and determine whether or not it needs to be adjusted.
If you are an employee, the IRS Withholding Calculator can help you determine whether you need to give your employer a new Form W-4, Employee’s Withholding Allowance Certificate, to avoid having too much or too little federal income tax withheld from your pay. You can use your results from the calculator to help fill out the form. You’ll find the IRS Withholding Calculator located at www.irs.gov — just enter the word calculator in the search box. You can also use the Form W-4 worksheets in Publication 919, How Do I Adjust My Tax Withholding?
Major life changes also could mean a necessary change in your withholding. Marriage, divorce, death of a dependent, and the birth or adoption of a child are all life changes that can result in a need to change the number of exemptions you claim on your W-4. Check your withholding if you had personal or financial changes in your life or if there were changes in the law that might affect your tax liability.
You may want to consider using the IRS Withholding Calculator to reevaluate your tax withholding for 2011, your estimated tax payments or both.
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Related Items on IRS.gov
- Publication 919, How Do I Adjust my Tax Withholding?
- IRS Withholding Calculator
- Form W-4, Employee’s Withholding Allowance Certificate
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