How to Estimate Federal Withholding
The IRS requires that employers withhold part of your paycheck to pay for your taxes at the end of the year. All employees have to file a W-4 form that tells the employer how many exemptions they are eligible for. Exemptions reduce the amount of money withheld from your taxes. To estimate your tax withholding, you need to calculate your taxable income. Use the federal withholding tables to calculate how much should be taken out.
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Instructions
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1
Determine the amount of money you make on a bi-weekly basis.
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2
Subtract any pretax expenses, such as certain health care premiums and retirement contributions.
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3
Add any taxable fringe benefits, like certain taxable life insurance plans or payments not made in money like food, clothing or housing.
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4
Multiply the total by the 26 to determine your annual income. For example, if your bi-weekly income is $1,500, your annual income would be $39,000.
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Subtract $3,650 for each exemption you claimed on your W-4 form. For example, if your income from step 4 was $39,000 and you claimed two exemptions, you would subtract $7,300 from $39,000 to arrive at $31,700.
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Calculate your tax withholding based upon the withholding tables available online and from the IRS. If you file a single return, use the single filing status table; if you file a joint return, use the married persons table. For example, if you were single and had a taxable income of $25,400, you would have a tax liability of $2,572. Ideally, this amount should be withheld annually from your paycheck.
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Divide the total you need withheld over the course of the entire year by 26 to estimate how much will be taken out for taxes each bi-weekly pay period. For example, if you need $2,572 taken out over the course of the year, approximately $98.92 should be taken out of each pay check.
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References
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