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By Marcia Richards Suelzer, Toolkit Staff Writer
As summer winds down, this is an excellent time to make sure you are on track to have the correct amount withheld from your wages this year. This is especially true if you got married or divorced, added or lost a dependent, purchased a home, changed jobs or retired. In addition, you should also check your withholding if you are going to have a significant amount of income that is not subject to withholding (such as capital gains) or if you start or stop a second job.
Use the IRS Withholding Calculator
The IRS has made it easier than ever to verify that your withholding is correct by creating an interactive calculator. The Withholding Calculator at IRS.gov can help you figure the correct amount of federal withholding and provide information you can use to complete a new Form W-4, Employee's Withholding Allowance Certificate.
You will need to have your most recent pay stubs and your most recent federal income tax return to use the calculator effectively. In order to get the most accurate result, the IRS advises that you:
Make sure to keep a copy of your new W-4 with your tax records.Use Publication 919 for Complex Situations
For many people, the withholding calculator is a great tool that can simplify the process of determining your withholding. However, some tax situations are more complex. You are likely to fall into this category if:
If you have one or more of these tax complications, then you will probably achieve more accurate withholding by following the instructions in http://www.irs.gov/pub/irs-pdf/p919.pdf Publication 919, How Do I Adjust My Tax Withholding, which is available at www.irs.gov or by calling 1-800-TAX-FORM (1-800-829-3676). This publication has worksheets that enable you to accurately determine withholding regardless of the complexity of your tax picture.
August 8, 2011.