How to correctly understand the IRS Tax Withholding Estimator results for 2025?

I've been frustrated the past couple years because my spouse and I end up owing money when we file taxes. Trying to avoid that headache for next year. So yesterday I decided to try the IRS Tax Withholding Estimator, but now I'm completely confused by the results it's giving me. At the top of the results page, it shows our expected withholding, expected tax obligation, and then calculates how much we'll owe: Projected amount owed $2,145 That seems pretty accurate since we owed about $2,100 this year, so I'm guessing the estimator is working correctly there. What I can't figure out is that the estimator recommends I put **$5,580** on Step 4(a) Other Income (not from jobs) on my W4, and then enter **$216** on Step 4(c) Extra withholding. I get paid every two weeks (26 paychecks annually). By my calculations, $216 × 26 = $5,616 in extra withholding for the year. How does that make sense? If we're projected to owe an additional $2,145 beyond what's already withheld, why would we need to withhold an extra $5,616 to cover a $2,145 shortfall? A couple things that might matter: 1. I entered our income as gross amounts from our payroll portal (the estimator wasn't super clear about this) 2. My spouse has health insurance premiums deducted from each check, while I contribute to an HSA plus have vision and dental deductions (but no health insurance). It looks like the $5,580 they want me to list on 4a of the W4 might actually be related to our HSA and health insurance contributions. But why would that be "additional"? Those amounts were already included in the gross income figures I entered earlier in the estimator. Should I be entering our income MINUS health insurance and HSA contributions to get this to make sense?

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22 comments

Aaliyah Jackson

•8M

The IRS Tax Withholding Estimator can definitely be confusing! The issue you're running into is likely related to how pre-tax deductions are handled. When you entered your gross income, you included money that isn't actually taxable (like your HSA and health insurance contributions). These are pre-tax deductions that reduce your taxable income, but the estimator doesn't know that unless you specifically tell it. The recommendation to put $5,580 on Step 4(a) is actually INCREASING your taxable income in the IRS's eyes. Step 4(a) is for additional income that doesn't have withholding, so putting a number there tells your employer to withhold more. What you probably want to do is: 1. Go back to the estimator 2. Enter your income as your taxable wages (gross minus pre-tax deductions) 3. Make sure you properly categorize your HSA contributions in the appropriate section For your situation, you might want to just use Step 4(c) to increase your withholding directly. If you owed about $2,145 last year and get paid biweekly, adding about $83 per paycheck ($2,145 ÷ 26) in extra withholding would cover the shortfall without messing with Step 4(a).

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Giovanni Rossi

•8M

That makes so much more sense! I didn't realize that putting a number on Step 4(a) would actually INCREASE my taxable income. I thought it was telling the IRS "hey I already accounted for this income elsewhere" but it's actually saying "please tax me on this additional income." No wonder the numbers seemed off. If I just want to make sure we don't owe next year, do you think it's better to simply use Step 4(c) with about $83 per paycheck like you suggested, rather than trying to get all the pre-tax deduction calculations perfect?

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Aaliyah Jackson

•8M

Yes, using Step 4(c) with about $83 per paycheck would be the simplest approach if your goal is just to avoid owing at tax time. It's a direct increase to your withholding without changing any calculations. The more precise approach would be redoing the estimator with accurate taxable income figures, but sometimes simplicity wins. Just keep in mind that if your income or deductions change significantly during the year, you might want to run the estimator again with updated information.

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KylieRose

•8M

I had the exact same issue with the IRS Withholding Estimator! After hours of frustration, I found taxr.ai (https://taxr.ai) which completely simplified this process for me. It analyzes your tax documents and tells you exactly what to put on your W-4 without all the confusion. The tool automatically identified my pre-tax deductions and calculated the right withholding amount instead of that weird "put money in 4(a)" approach that the IRS tool uses. It also explained that the IRS tool often gets confused when you enter gross income rather than taxable income. I uploaded my last paystub and previous tax return, and it immediately showed me that I needed to withhold an extra $72 per paycheck (not the $200+ the IRS tool was telling me). Been using the new withholding for 3 months and my projected refund/amount owed is right where I want it to be.

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KylieRose

•8M

Yes, it does look at your paystubs and tax documents - that's how it makes accurate calculations. They use bank-level encryption and their privacy policy says they don't store your documents after analysis. I felt it was as secure as using TurboTax or similar tax services. It actually matched almost exactly what my previous accountant had calculated for me, but without the $350 fee I used to pay for tax planning. It broke down exactly why the IRS tool was giving me such strange results and explained everything in simple terms. It handles multiple jobs and married filing jointly situations really well. You can upload documents from both spouses, and it factors in different pay rates, varying withholding patterns, and even considers how different payroll systems calculate withholding differently throughout the year.

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Sasha Ivanov

•8M

I was totally confused by the IRS Withholding Estimator too! After seeing the recommendation from Profile 7, I gave taxr.ai a try and wow - what a difference. I uploaded my last two paystubs (mine and my wife's) and our 2024 tax return. The analysis showed that the IRS calculator was double-counting some of our income while missing some of our deductions entirely. The tool explained that the confusing Step 4(a) recommendation from the IRS calculator was actually making our withholding problem worse! Instead of the complicated approach from the IRS, taxr.ai gave me a simple number to put on line 4(c) that accounted for both our jobs. Been using their recommendation for about 6 weeks now, and our projected tax situation is finally balanced - no big refund, no surprise bill. What I really appreciated was the plain-English explanation of why the IRS calculator got confused by our situation. Makes me feel a lot more confident going into next tax season!

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Liam Murphy

•8M

For anyone struggling to reach the IRS for help with withholding questions (I was on hold for 2+ hours), I found a service called Claimyr (https://claimyr.com) that got me through to an actual IRS agent in about 15 minutes. They have a demo video showing how it works here: https://youtu.be/_kiP6q8DX5c I was skeptical at first, but after waiting on hold for hours across multiple days with no luck, I gave it a shot. Used it to ask about this exact same withholding estimator confusion. The IRS agent I spoke with explained that the estimator often suggests filling out Step 4(a) incorrectly when you have pre-tax deductions, and that for most people, just using 4(c) for extra withholding is much simpler. The agent walked me through exactly what numbers to use based on my last tax return, and confirmed I should be ignoring the 4(a) suggestion completely in my situation.

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Liam Murphy

•8M

It's not magic - they use an automated system that continually redials the IRS using their algorithm to identify the best times to call and which IRS departments have shorter wait times. Once they get through, they conference you in directly with the IRS. They don't have access to any of your tax information. It's just a calling service - you talk directly to the IRS agent yourself and share whatever information you're comfortable with. I only discussed my withholding questions, not my personal details.

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CaptainAwesome

•8M

I was completely wrong about Claimyr! After waiting on hold with the IRS for 3 hours yesterday and eventually getting disconnected, I reluctantly tried the service mentioned above. Got connected to an actual IRS agent in about 11 minutes. The agent explained that the withholding estimator is notoriously bad at handling pre-tax deductions like HSA contributions and health insurance premiums, which was exactly my problem. She recommended I ignore the Step 4(a) suggestion completely and just use Step 4(c) with an extra amount per paycheck that would cover what I had owed last year. She also explained that the reason the estimator suggested such a high amount was because it was trying to adjust for what it thought was untaxed income, when in reality those amounts weren't taxable to begin with. Whole call took about 20 minutes, and I finally understand why my withholding has been so off. Wish I hadn't spent days trying to figure this out on my own!

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Yuki Tanaka

•8M

Another thing to consider: Your W-4 settings won't update retroactively. If you're changing your withholding now in June, you've already gone through almost half the year with your current withholding. That might be why the numbers seem so high. If you've underpaid by $2,145 across the whole year, but you're only adjusting withholding for the remaining paychecks, you'll need to withhold more per paycheck than if you had started in January. For example, if you have 14 paychecks left this year instead of 26, you'd need to withhold about $153 extra per check ($2,145 ÷ 14) rather than just $82 per check if you had started in January. The IRS estimator should account for this timing difference in its calculations.

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Diego Fisher

•5M

I've been a tax preparer for over 15 years, and I can tell you that the IRS Withholding Estimator is one of the most frustrating tools out there, especially for married couples with pre-tax deductions like HSAs and health insurance. The core issue you're experiencing is that the estimator treats Step 4(a) as "additional income that needs to be taxed" rather than "income adjustments." When you entered your gross wages including pre-tax deductions, the estimator didn't realize those HSA and health insurance amounts aren't actually taxable income. Here's what I recommend to my clients in your situation: 1. **Use the simple approach**: Take your shortfall from last year ($2,145), add a small buffer (maybe $300), and divide by your remaining paychecks. Put that amount on Step 4(c) for extra withholding. 2. **Ignore Step 4(a) completely** for your situation - it's causing more confusion than help. 3. **Set a calendar reminder** for January to adjust your W-4 back down to a "maintenance" level once you've caught up on this year's shortfall. The estimator works better for simpler tax situations, but with multiple jobs, HSAs, and various pre-tax deductions, the old-fashioned math approach is often more reliable and definitely less stressful!

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Ravi Kapoor

•4M

Thank you so much for this professional perspective! As someone new to navigating tax withholding, it's reassuring to hear from an actual tax preparer that the IRS tool is genuinely problematic and not just user error on my part. Your simple approach makes perfect sense - I think I was overthinking it by trying to make the estimator work "correctly" when clearly it's not designed for situations like mine. The math approach of taking last year's shortfall plus a buffer and spreading it across remaining paychecks is so much cleaner. One quick question: when you say "maintenance level" for January, do you mean going back to zero extra withholding, or should there typically be some ongoing extra amount to prevent the same problem next year?

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Carter Holmes

•3M

For the "maintenance level," it depends on whether the underlying issue that caused your shortfall gets resolved. If your withholding was off because of the same factors (HSA contributions, health insurance premiums, etc.), you'll likely need some ongoing extra withholding, but much less than the "catch-up" amount. A good rule of thumb: take your annual shortfall (like that $2,145) and divide by all 26 paychecks for the following year. So you'd need about $83 per paycheck in extra withholding as your baseline maintenance amount. Then the catch-up amount for the remainder of this year would be higher to make up for the months you've already under-withheld. This way you're not scrambling to fix the same problem every year!

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