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What is IRS Publication 505, Tax Withholding and Estimated Tax?

IRS Link to Publication — Found Here

This IRS guide gives taxpayers and businesses an idea of how to calculate the appropriate amount of withholding to do and how to continually estimate tax rate on an ongoing basis for an entire year.

It is about 60 pages long and touches on many issues related to tax withholding. Tax withholding applies to payroll needs, self-employed reporting, as well as some retirement planning applications, among other things.

Publication 505 serves as a guide to make sure all goes smoothly for people and their withholding requirements. There are penalties for not submitting withholding payments, and the IRS will credit interest back to the payer for the time elapsed since overpayment. The guide details tax withholding practices for salaries, tips, some fringe benefits, pensions, gambling winnings, and more.

The W-4 is a ubiquitous document that helps to determine an employee’s withholding allowance. Penalties for underpayment of taxes are .5% per month past the due date. Tax withholding estimates tends to be paid-in quarterly.

Keywords: quarterly review, income taxes, withholding, payroll taxes, W-4,