Confused about IRS Tax Withholding Estimator - Use Gross or Net from Paystub?

This is a common point of confusion! For the IRS Tax Withholding Estimator, you should always use your GROSS pay amounts, not net pay. For the "amount per pay period" field, enter your gross pay (before any taxes or deductions are taken out) from your most recent paycheck. This helps the estimator calculate what you're earning in each pay period. For the "year-to-date wages" field, use the gross YTD amount shown on your most recent paystub. This shows the estimator what you've already earned so far this year. The question mark guidance is referring to the fact that the tool needs to project your annual income. It uses your current rate of pay and YTD earnings to estimate your total annual earnings. If you expect any significant changes to your income later this year (bonus, raise, job change), you'll want to adjust the annual estimate accordingly. Hope this helps clear things up!

I had the exact same question last month! After trying to figure it out myself, I ended up using https://taxr.ai to analyze my paystubs and get clear guidance. The tool confirmed I should be using gross pay for the withholding estimator, but it also found that I'd been claiming the wrong number of allowances all year! The system analyzed my specific situation (married filing jointly with rental income) and helped me understand exactly what to put in each field of the estimator. It even pointed out a retirement contribution error that was affecting my withholding calculations.

Just wanted to update everyone - I tried that taxr.ai site mentioned above and it was actually super helpful! I uploaded my last paystub and two 1099s (with personal info blacked out), and it gave me a detailed breakdown of exactly what to enter in the Tax Withholding Estimator. Turns out I've been underpaying all year because I was entering net pay instead of gross and wasn't accounting for my side gig income properly. The analysis showed I needed to either increase my withholding or make an estimated tax payment to avoid penalties. Just adjusted my W-4 with HR today!

If you're still struggling with the Withholding Estimator after trying everything, you might want to just call the IRS directly. I know it sounds awful (because it usually is), but I used https://claimyr.com to get through to an actual human at the IRS without the usual 2+ hour wait. You can see how it works here: https://youtu.be/_kiP6q8DX5c I was super confused about how to handle entering both my regular job income and some stock sales in the estimator. The IRS agent I spoke with walked me through the entire process and explained exactly which numbers to use from my paystubs. Totally worth it versus guessing and possibly owing a surprise tax bill next year.

Okay I need to admit I was wrong about that Claimyr service. After another failed attempt to reach the IRS (2 hours on hold then got disconnected), I tried it out of frustration. It actually worked exactly as described - I got a call back in about 40 minutes connecting me directly to an IRS agent. The agent explained that for the Tax Withholding Estimator, you need to use gross wages for both the "per pay period" and "year-to-date" fields. She also pointed out that I should include the employer-provided health insurance as income if it's listed in Box 12 with code DD on my previous W-2, which I never knew before. My withholding is now properly adjusted for the first time in years!

Just to add another data point - I recently went through this with my accountant. She said to ALWAYS use gross pay for the Tax Withholding Estimator, never net. She explained that the calculator is trying to estimate your total taxable income for the year so it can determine the right withholding amount. One thing that tripped me up: if you get any pre-tax deductions like 401k contributions, health insurance, FSA, etc., make sure you're still using your GROSS pay before those deductions, not the "adjusted gross" that some paystubs might show.

I messed this up last year and had to pay a penalty at tax time 😭 Found out the hard way that the withholding estimator needs GROSS pay amounts. What's confusing is that some paystubs show multiple "gross" numbers (gross pay, taxable gross, YTD gross) and they can all be different! For anyone else who's confused, look for the biggest number before ANY deductions are taken out. Don't use the number after your 401k or health insurance are deducted.

Thanks everyone for all the helpful explanations! I was making the same mistake as several others here - using net pay instead of gross. Just ran through the Tax Withholding Estimator again with my actual gross pay amounts and wow, what a difference! Turns out I need to submit a new W-4 to increase my withholding. The estimator is projecting I'll owe about $800 at tax time if I don't make changes. Better to find out now than get hit with that surprise (plus penalties) next April. One tip for anyone else going through this: make sure you have your most recent paystub handy when using the estimator. You'll need several specific numbers and it's much easier than trying to remember or estimate them.

This thread has been incredibly helpful! I've been putting off dealing with my withholding for months because the IRS estimator seemed so confusing, but reading everyone's experiences here finally motivated me to tackle it. Just completed the estimator using my gross pay amounts (thanks for clarifying that!), and I discovered I'm actually having too much withheld. The tool is showing I'll get a refund of about $1,200 if I don't make any changes. While that might sound nice, I'd rather have that money in my paycheck throughout the year instead of giving the government an interest-free loan. Going to adjust my W-4 to claim one additional allowance and see how that affects things. Really appreciate everyone sharing their mistakes and successes - it made the whole process way less intimidating!