The IRS's Own Tool — Free, Accurate, Underused
The IRS publishes a withholding estimator that's more accurate than most paid alternatives for W-2 employees. It's free, requires no account, and takes about 15 minutes.
It lives at irs.gov/W4app and produces a specific W-4 recommendation — including how much additional withholding to request if you're running behind.
The IRS Withholding Estimator was redesigned in 2020 to match the new W-4 form, with significant improvements in accuracy for households with multiple jobs. Source: IRS (2020) — Source
What You'll Need
- Most recent pay stub (year-to-date income and withholding)
- Last year's tax return (AGI, deductions, credits)
- Information on other income (freelance, investments, rental)
- Expected deductions if itemizing
What the Estimator Produces
- Whether you're on track, over-withholding, or under-withholding
- Exactly how to update your W-4
- Whether you need additional per-paycheck withholding
About 30 million taxpayers underwithhold each year, according to a 2019 GAO report. Source: GAO Report GAO-19-628 — Source
Limitations
The IRS tool is excellent for W-2 employees but less useful for self-employed workers (use the self-employment tax calculator) and complex investment situations.
Run it in February after your W-2 arrives. Run it again in July after any major income change.
See the tax estimator guide and tax withholding calculator guide.
Get Started with Avenue for a continuous estimate that updates as your finances change.