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Video instructions and help with filling out and completing What Form 2220 Withholding

Instructions and Help about What Form 2220 Withholding

Hello everyone its Adam Hagerman financial coach what I wanted to talk to you about today is something called the IRS withholding calculator so if you're like the typical American you probably get a fairly large tax refund every year the average for 2022 was about $3,000 so if you're if you're somewhere around there this tax withholding calculator might be useful to you what it what it helps you do is kind of project your tax liability for the current tax year and adjust your withholding so it kind of that it comes very very close to what your estimated tax liability is going to be so if you fill out the calculator and it says your taxes for 2022 are going to be $10,000 you want to the calculator can help you determine how to make some adjustments to your payroll in order to get close to that $10,000 vs. kind of just guessing and maybe over guessing and saying you know with you know okay well just withhold 15,000 and that would make you get a $5,000 tax refund when you go ahead and fill out your 2022 tax return later on in 2022 so this will help you make some adjustments to get you closer to what your actual anticipated tax is going to be which in turn can increase your cash flow on a monthly basis to help you you know pay off debt faster save some money for an emergency fund invest it etc you want that money in your pocket on a monthly basis versus kind of waiting for it every year you know a lot of people you know sit around waiting for their tax refund and a lot of times that large amount of money can get compartmentalized a little differently in your mind and you may actually end up spending it you know unwisely you may buy something with that large tax refund that you normally wouldn't have bought if it would if that money would have have come to you over over you know each pay period versus waiting for such a large tax refund so what you want to do to use the calculator is to actually go to irs.gov it is the you know federal Internal Revenue Services website and as you can see here the IRS is website has a lot going on there's a lot of stuff all over the place here lots of lines lots of things to look at and it can actually be quite confusing so what I do is actually just go up here to this search box and type in tax withholding calculator go ahead and hit enter or you could have hit that little search button up at the top there and it will give you the search results and it's usually always the top recommendation here it says IRS withholding calculator you just click that button and head off to the site this is the IRS is I would qualify would call disclaimer page that talks about the IRS with a holding calculator and goes over you know kind of who it helps etc so for example who can benefit from the withholding calculator usually it's mostly just for individuals that receive a paycheck you know every two weeks or monthly or whatever they're on it they have a salary or an hourly wage and they have tax with withheld excuse me taxes withheld directly from their payroll department at work it's probably the calculator is probably not good for individuals who are self-employed or you know have a they file a there are a score per a ssin or a c-corporation or something so or you'd file a Schedule C if none of those things really ring a bell then you're probably safe and using the calculator but if you do if you are self-employed file a Schedule C etc this probably isn't the best tool for you you may want to consider looking at publication 505 in a RS publication 505 which is the tax withholding and estimated tax calculator it's more kind of hands-on pencil and paper kind of thing the second section here is talking about a caution so if you're subject to the alternative minimum tax self-employment tax other types of taxes such as foreign income taxes etc this probably isn't for you because the calculator doesn't take those things into account so if you're subject to those once again you might want to use publication 505 what you'll need for the for the calculator is your most recent paystubs and also your most recent income tax return so at this point it's January 28th to 2022 the most recent income tax you probably have is your 2022 tax return but you may have all the stuff ready for your 2022 tax return and that might be helpful to you as well and you you need the most recent pay stub because the calculator utilizes a certain date you need to have the most recent thing available because the calculator uses that number and basis you're withholding etc and your your your anticipated amounts of things based off of that number so you want to have that available and ready so what you want to do then is actually go up here and click continue to the withholding calculator and what I did for this example here is I just kind of created a fictional couple and we're going to be talking about their income etc and as we kind of go through the things here so in the first section here you it's it's asking what your filing status will be in 2022 if you are you know married you can either choose married filing jointly married filing separately if you are getting divorced by you know before the end of 2022 you may then be single or head of household it's not what it currently is is what you anticipate.

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