The IRS withholding tax estimator is for taxpayers that are employees and have an employer that will withhold federal income tax from their paychecks on a regular basis.

In this example, we cover the following fact pattern:

1. Single filing taxpayer (not married) who is 25 years old.
2. No qualifying children or other dependents.
3. Works one job with a salary of $48,000 per year and no other income.
4. Claims the standard deduction (rather than the itemized tax deduction).
5. No federal tax credits or other adjustments to income.

IRS Form W4 is an employee withholding certificate that helps the employer calculate how much federal withholding taxes, if any, should be taken out of an employee's paychecks.

The amount of federal withholding tax (Box 2 of the W2) is eventually claimed on the employee's Form 1040 tax return. If the amount of tax withheld exceeds the taxpayer's income tax liability at yearend, the taxpayer will generally receive a federal tax refund.

The withholding estimator provides a Q&A approach to more accurately gauge how to complete your Form W4.

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