Stay on Track and Avoid Tax Surprises: Check Your Withholdings

As we move through 2025, the IRS is urging taxpayers to take a proactive step that could save them stress and money come tax season: check your tax withholding now.

Why It Matters

Taxes in the U.S. operate on a pay-as-you-go system. That means you’re expected to pay taxes on your income as you earn it—typically through paycheck withholding or estimated tax payments. If you don’t withhold enough, you could face a large tax bill or even penalties when you file your return. On the flip side, withholding too much means you’re giving the government an interest-free loan.

The IRS Tax Withholding Estimator

To help taxpayers get it right, the IRS offers a free online tool: the Tax Withholding Estimator. It's designed for employees, independent contractors, and retirees to determine whether they’re on track with their federal income tax payments.

When to Use It

The IRS recommends using the estimator at least once a year, especially after major life events like:

• Getting married or divorced

• Having a child

• Buying a home

• Changing jobs

• Picking up a side gig

What You’ll Need

To get the most accurate results, gather:

• Your most recent pay stubs

• Income statements (including your spouse’s, if filing jointly)

• Your latest tax return

Next Steps

If the estimator shows you’re off track, you can:

• Submit a new Form W-4 to your employer to adjust your withholding

• Change how much you set aside for estimated taxes if you’re self-employed

For Complex Situations

Taxpayers with more complicated finances—like those subject to the alternative minimum tax or with significant capital gains—should consult IRS Publication 505 for more detailed guidance.

Bottom Line

A quick check now can help you avoid a big surprise later. Whether you want to avoid a tax bill or just keep more of your paycheck throughout the year, adjusting your withholding is a smart move. Please contact us if you'd like to discuss this topic further or need assistance with your particular situation.