The amount of tax withheld by the IRS depends on several factors, including your income, filing status, deductions, and credits. Additionally, your employer may use information you provide on Form W-4 to determine how much tax to withhold.
The IRS provides tax withholding tables that employers use to calculate the amount of federal income tax to withhold from your wages. These tables take into account your filing status (such as single, married filing jointly, or head of household) and the number of allowances you claim on your W-4 form.
The more allowances you claim, the less tax will be withheld from your paycheck. If you claim zero allowances, your employer will withhold the maximum amount of tax. You can also request additional withholding from each paycheck by specifying a specific dollar amount to be withheld.
It's important to note that the tax withheld from your paycheck is an estimate of your actual tax liability for the year. When you file your annual tax return, you will reconcile the amount withheld with your total tax liability. If too much tax was withheld, you may receive a refund. If too little tax was withheld, you may owe additional taxes.
For tax year 2021 there are seven federal tax brackets: 10%, 12%, 22%, 24%, 32%, 35% and 37%.
The tax brackets for 2021 break down as follows:
To estimate your taxes, the IRS has created a Tax Withholding Estimator. Use this tool to estimate your taxes, and to see if you need to make any changes with your employer to the amount being withheld from each paycheck.
To get a more accurate estimate of the tax withheld from your paycheck, you can use the IRS withholding estimator above, or consult with a tax professionals like the ones at Peter Witts CPA PC. Our team of experts have over 20 years of experience and are here to help.
I’m Kristin, the PWCPA PC Customer Success Specialist. For more information about this topic, or any other, you can always reach me through our customer ticketing system.