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How do you estimate federal taxes?

A:

Quick Answer

Most taxpayers may estimate federal tax withholding by reviewing an updated tax bracket chart from the IRS, explains Bankrate. Some taxpayers, such as self-employed workers, must pay estimated taxes on a regular basis, reports the Internal Revenue Service.

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Full Answer

Most employees file a W-4 tax form with their employers to allow the IRS to automatically deduct approximate federal taxes from each paycheck, as Bankrate reports. The answers the taxpayer provides on the W-4 form impact the amount of tax withheld. Using filing status and household income, taxpayers may estimate their taxes within a current list of tax brackets. Bankrate claims that completing the W-4 form incorrectly may cause the IRS to withhold too much or not enough tax.

Self-employed taxpayers and others who do not have the IRS withhold taxes are required to pay estimated taxes, explains the IRS. A form 1040-ES is required and allows taxpayers to estimate how much they owe each quarter. Taxes owed should be estimated as accurately as possible to avoid penalties and to avoid paying too much tax, according to the IRS. The IRS requires these payments to follow a quarterly schedule, with taxes due on a specific day each quarter. Failing to file incurs a penalty.

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