Q:

How do you calculate tax exemptions?

A:

Quick Answer

Someone who wants to calculate tax exemptions can use the IRS withholding calculator. When using the calculator, it is a good idea to have pay stubs, income tax returns and accurate estimates on hand.

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Full Answer

  1. Make sure the IRS withholding calculator is the right tool for you
  2. The IRS withholding calculator is an appropriate tool for employees subject to normal tax rules. Individuals who are self-employed, subject to minimum taxation laws or due to pay other taxes should try the Pub 505 tax instructions, which are also available via the IRS website.

  3. Gather all the right information
  4. Creating an accurate estimate is essential when using the results on a Form W-4. Therefore, those using it need to collect pay stubs, their most recent income tax return and estimate values that are as accurate as possible.

  5. Input the information into the calculator
  6. When using the calculator, read all the information on the screen carefully. In addition, it is necessary to enable scripting before using the application.

  7. Use the results on a Form W-4
  8. People who find they have tax deductions available should use the calculator's results to fill out a new Form W-4. After completing the form, they should submit it to their employer so they can benefit from the new calculation.

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