The IRS Advises Employees to Check Withholding

The Internal Revenue Service is reminding individual taxpayers to check 2009 federal income tax withholding levels to ensure there are no surprises when returns are due in April.

Because the Making Work Pay credit lowered tax withholding rates this year for 120 million American households, taxpayers should ensure that enough tax is withheld if they are among these groups: multiple job holders, families with both spouses working, workers who can be claimed as dependents by other taxpayers, and pensioners. Not adjusting withholding could result in taxes owed or smaller refunds, IRS said.

The IRS withholding calculator on IRS.gov can help a taxpayer compute the proper tax withholding. The worksheets in Publication 919, How Do I Adjust My Withholding?, can also be used to do the calculation. If the result suggests an adjustment is necessary, the taxpayer should submit a new Form W-4, Withholding Allowance Certificate, to his or her employer or adjust the amount of quarterly tax paid.

IRS also reminds unemployed workers that the first $2,400 of unemployment benefits received in 2009 are tax-free for federal income tax purposes.

Taxpayers should visit IRS.gov for more information about how to adjust federal income tax withholding, IRS recommends.