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Home » News » IRS Warns: Check Your 2025 Withholding Now or Risk a Surprise Tax Bill

IRS Warns: Check Your 2025 Withholding Now or Risk a Surprise Tax Bill

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  • Digital Team 

The Internal Revenue Service (IRS) is urging Americans to review their tax withholding early in 2025 to avoid costly surprises next tax season. Whether you’re a full-time worker, gig contractor, or retiree, adjusting your tax withholding now can prevent a hefty tax bill or unexpected refund in 2026.

Use the IRS Tax Withholding Estimator

Person reviewing paycheck and IRS Form W-4 with calculator and laptop on a desk — representing tax withholding planning for 2025.

The IRS Tax Withholding Estimator, available for free at IRS.gov, helps taxpayers determine if they’re having the right amount of federal income tax withheld from their paychecks.

With tax obligations following a pay-as-you-go model, the IRS says the tool is essential for:

  • Employees
  • Freelancers and gig workers
  • Social Security recipients
  • Anyone with multiple income sources

“Using this tool just once a year can help you avoid underpaying or overpaying your taxes,” the IRS said in a statement.

Why It Matters Now

Many Americans wait until year-end to make tax adjustments, but the IRS says adjusting withholding now—early in the year—gives you the most flexibility to fine-tune your take-home pay or avoid penalties.

The estimator helps you:

  • Avoid underpayment penalties
  • Increase take-home pay now by reducing over-withholding
  • Prevent large unexpected refunds (which are just interest-free loans to the government)

What You’ll Need to Use the Tool

Before using the estimator, gather:

  • Your latest pay stubs (including year-to-date info)
  • Income details for side jobs or freelance work (like 1099s)
  • Information from your most recent tax return
  • Social Security benefit amounts (if applicable)

Once completed, the tool provides personalized recommendations for updating your Form W-4, which you submit to your employer to adjust withholding.

Adjusting Your Withholding: What to Know

The current version of Form W-4, introduced in 2020, offers four flexible options for adjusting how much tax is withheld. You can:

  • Increase or decrease your withholding amount directly
  • Adjust income that’s subject to withholding
  • Account for deductions and credits
  • Set a specific dollar amount to withhold each pay period

If you receive Social Security, pension income, or unemployment, the IRS recommends using Form W-4V to request voluntary withholding.

Pro Tip: Update When Life Changes

The IRS recommends revisiting your withholding if you’ve experienced:

  • A new job or major income change
  • Marriage or divorce
  • A new child or dependent
  • Major deductible expenses (like home buying or medical costs)

Final Reminder

If you just filed your 2024 taxes and were surprised by your bill—or refund—it’s the perfect time to act. The IRS encourages taxpayers to take 10 minutes now to avoid headaches next April.

🔗 Use the estimator here: Tax Withholding Estimator – IRS.gov

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