2009 IRS Withholding Federal Tax Help

Here is some great federal tax help for individuals looking to determine how the changes caused by the American Recovery and Reinvestment Act of 2009 will affect their 2009 IRS Withholding. The IRS provides individuals federal tax help by providing a 2009 Withholding Calculator that incorporates the tax changes this year.

2009 WITHHOLDING CALCULATOR
The IRS 2009 Withholding Calculator will help individuals answer their tax questions while calculating their Withholding Tax for the year.

Why would you use the 2009 Withholding Calculator? To help ensure that you do not have too much or too little income tax withheld from your pay. It is not a replacement for Form W-4, but you will probably find it more accurate and easier to use than the worksheets that accompany Form W-4.

The 2009 Withholding Calculator will benefit employees who would like to change their withholding to reduce their tax refund or their balance due, anyone with more than 1 job, couples who are both employed and those with several children eligible for the Child Tax Credit.

If you will be subject to alternative minimum tax, self-employment tax, or other taxes; or if any of your current jobs will end before the end of the year, you will probably achieve more accurate withholding by following the instructions in Publication 919, How Do I Adjust My Tax Withholding?

2009 WITHHOLDING TAX CHANGES

1. The new Making Work Pay Credit (with new withholding tables that employers should have implemented by April 1) have been incorporated into the calculator.

You should use the calculator to ensure that the reduced withholding will not result in having too little income tax withheld (possibly causing you to owe taxes next year) if:

You are an employee with two concurrent jobs,
You and your spouse both work, or
You can be claimed as a dependent on someone else’s tax return (since you are not eligible for this credit).

2. Pension income: Non-government pension income is not eligible for the Making Work Pay Credit. If you expect to receive a significant amount of pension income in 2009, you should use the Withholding calculator so that you can adjust your withholding appropriately for the second half of the year.

3. Unemployment Compensation: The first $2,400 of unemployment compensation an individual receives in 2009 is now tax free.

In this tough economic climate, it is smart for individual taxpayers to take advantage of the federal tax help provided by the 2009 Witholding Calculator. It will better prepare you for the result after calculating your 2009 federal income tax.

source: irs.gov