How to Estimate Federal Withholding

Federal income tax is usually withheld from your wages, and is calculated based on withholding allowance information you give your employer. This type of withholding is called a “pay-as-you-go” tax, and, at the end of the year, should add up to equal the federal tax due on your income. Your employer uses certain Internal Revenue Service materials to calculate your federal withholding, but you can also estimate your withholding using the same information.

Step 1

Estimate your gross pay for the pay period. If you’re paid hourly, calculate your gross rate of pay by the number of hours you expect to work during the period. If you’re paid a regular salary, calculate the gross salary you expect for the pay period.

Step 2

Subtract pretax deductions from your gross pay. These include your portion of payments for employer benefit programs like health insurance and retirement plan contributions. The result is your gross pay subject to income tax.

Step 3

Obtain your W-4 withholding allowance information. You give a W-4 to your employer when you first start your job. This form tells your employer how much federal income tax to withhold from your pay. If you don’t remember the number of allowances you claimed on the form, ask your employer.

Step 4

Download the Employer’s Tax Guide from the IRS website and flip to the “Wage Bracket” withholding tables near the back.

Step 5

Look up the table that matches your payroll frequency and marital status.

Step 6

Find the income range for your salary subject to income tax and scroll over to the number of withholding allowances you claim on Form W-4. The amount shown on the table is your estimated federal withholding.

the nest