YOLANDA RUIZ: I see it's the top of the hour, so let's get started. Welcome to today's webinar on the Tax Withholding Estimator. We're glad you're joining us today. My name is Yolanda Ruiz and I'm a Stakeholder Liaison with the Internal Revenue Service, and I will be your moderator for today's webinar which is slated for 120 minutes. Before we begin, if there's any one in the audience that is with the media, please send an email message to the address listed on the bottom of the slide. Be sure to include your contact information and the news publication you're with.

Our Media Relations and Stakeholder Liaison staff will assist you and answer any questions you may have. And as a reminder, this webinar will be recorded and it will be posted to the IRS video portal in a few weeks. And this portal is located at www.irsvideos.gov. And please note, continuing education credits or certificates of completion are not offered if you view an archived version of our webinar on the IRS video portal. In case you do experience a technology issue, this slide shows helpful tips and reminders. We posted a technical help document that you can download from the Materials button on the left side of your screen. It provides the minimal system requirements for viewing this webinar along with some best practices and quick solutions.

And if you completed and passed your systems check and you're still having problem, try one of the following. The first option is to close the screen where you're viewing the webinar and relaunch it. And the second option is to click the Gear icon. Now, some of you may not see the Gear icon, it depends on your web browser. If you do have it, the Gear icon will be in the top right corner of the slide and photo boxes, and you'll be given two choices. Select Flash instead of HLS from the available media box. And you should have received today's PowerPoint in a reminder email. If not, no worries. You can download it by clicking on the Materials button located on the left side of your screen as shown on the slide. And during the presentation, we'll take some breaks and share knowledge-based questions with you. At those times, a polling style feature which will pop-up on your screen will give you a question and multiple choice answers. Select the response that you believe is correct by clicking in the radio button next to your selection, and then clicking Submit. Some people may not get the polling question and this may be because your popup blocker is on. So, please take a moment, moment to disable your popup blocker now so that you can answer the questions. And if that doesn't work, you can use the Ask Question feature to submit your response. Also, if you have a topic specific question today, please submit it by clicking the Ask Question button. You do this by entering your question in the text box and then click in Submit. Very important, do not enter any sensitive or taxpayer-specific information. So, moving along with our session, let me introduce today's speakers Karen Brehmer and Sherry Saucerman are tax specialists with the Internal Revenue Service in the Communications and Liaison Division. Both work with tax professionals and small business owners in their respective areas, providing outreach and education in identifying ways the agency will be, can be more responsive to the customers' needs. And at this time, I'm going to turn it over to Karen to begin the presentation. Karen? KAREN BREHMER: Great. Thank you, Yolanda. And I'd like to add my welcome to everyone joining us today for this webinar on the new Tax Withholding Estimator. So let's take a look at the topics we're going to be covering in today's webinar. We'll start off by discussing the new user-friendly features and the design improvements of the Tax Withholding Estimator. And then we'll walk you through a scenario to demonstrate how to use the new estimator. We'll explain who should do a paycheck checkup to check their withholding. And we'll wrap up today's webinar by answering as many of your questions as we have time for, so let's get started. The new application has some great features. We've expanded what it can do and who can use it. And we've made it mobile friendly. And it's designed to make it easier for everyone to have the right amount of tax withheld during the year. It can be used by workers and it can also be used by retirees. It can also be used by self-employed individuals if they also have a wage earning job or a spouse with a wage earning job. And we're going to be going through a lot of the enhancements as we demonstrate its use, so let's get started. The IRS launched the new Tax Withholding Estimator in August 2019, and it replaced the IRS Withholding Calculator. And this is all part of our ongoing effort to improve the quality of our services.

We're continuously pursuing modernization, so we really hope that these efforts enhance our taxpayer relationships. Last year, we promoted the Withholding Calculator. And I thought it was a really good tool, but some people did have some difficulty in using it. And we listened to your feedback and the concerns that we heard from taxpayers and tax professionals who used the Withholding Calculator. And we took that feedback into account as we developed the Tax Withholding Estimator. We heard you when you said that you wanted a tool that can be used by people with self-employment income and people who are retirees, so that's what we did. So, we're going to cover all of this in more depth as we go through the webinar today, but here's the summary. We included plain language throughout and that makes it easier to use the tool. Here's some specifics. We improved the language of the questions and of the prompt. We have provided tips with more information and also links to additional resources when that's applicable. We've included titles for the steps and that tells you what kind of information you'll be entering at each step. We added the ability to make adjustments so that you could have a return balance that's close to zero when you file, if that's what you want. And we added suggested steps that you can take if you want a refund when you file. We've also included a new progress tracker to help you see how much more information you need to input. Sherry and I and others have been testing the Tax Withholding Estimator since it came out and the progress tracker is one of the new features that I really like. Another good thing about having that progress tracker is that it allows you to move back and forth through the steps. That is huge. That's fabulous. You can correct your previous entries. You can skip questions that don't apply to you. We've also added easily accessed tips to help you determine quickly if you qualify for various tax credits and deductions. In addition to the tips that you'll see on the screen, you'll often get links to more detailed information that's on IRS.gov. And again, we're going to show you how this looks and how it works as we go along. The estimator automatically calculates self-employment tax when you have self-employment income in addition to wages or pensions. And that is one of the new features. It also automatically calculates the taxable portion of any Social Security benefits.

If you're aware of the how it worked before, you'll be very excited about that new feature. And I also mentioned before but this is a mobile friendly design. So, it can be used on all types of devices. So, speaking of the mobile friendly design, the picture on this slide is the Tax Withholding Estimator on your cellphone. If any of you tried to use the withholding calculator on your cellphone, you can see that this is a vast improvement. And more people will now be able to use the new tool. In order to use the Tax Withholding Estimator, one person, hey, so maybe that's you, maybe that's your spouse if you're married filing joint, one person needs to have a regular paycheck or a pension. And if you have a regular paycheck or a pension, the estimator will take into account other sources of income including alimony, taxable scholarships, and unemployment compensation. And the estimator has been improved to provide more accurate estimates to taxpayers who also have self-employment income. The estimator includes the option to include self-employment income as a type of income and it calculates the self-employment tax and includes that in the result. We also help taxpayers with self-employment income by making them aware that they might qualify for adjustments that are related to self-employment income. And here's - here's two examples, the adjustment for self-employed health insurance deduction. The second example of making self-employed people aware of things they might qualify for is for contributions to retirement plans for self-employed people. These things, these include things like a SEP, which is a Simplified Employee Pension or a SIMPLE plan. Simple stands for Savings Incentives Match Plan for Employees. Those are two examples of qualified retirement plans for self-employed people. So, to learn more about those qualified retirement plans for self-employed individuals go to irs.gov and enter "retirement plans for self-employed people" in the search box. And I do want to mention one more thing here. If you're self-employed, you know that you have to calculate self-employment tax and then you get to take an adjustment to income of one-half of your self-employment tax. The estimator does that for you automatically. You don't have to calculate it and you don't have to enter it in the section that I was just talking about. The estimator figures out your self-employment tax and it figures out the adjustment to income for one-half of your self-employment tax. Another improvement is that you can use the estimator if you have Social Security income. You can now include your Social Security income as a part of your total income. And what's cool is the estimator will automatically determine the taxable portion of your Social Security income. And with that, Sherry, I'm going to turn it over to you now. And I'm hoping you will tell the audience about the design improvements. SHERRY SAUCERMAN: OK. Thank you, Karen. Well, to make the tool more user-friendly for taxpayers, we changed the whole look and feel. It makes it more consistent with other tools that are on irs.gov like user tax account and our other online applications. We added helpful headers. And those headers make it easier for you to understand what step you're on and what you can be expected to enter there. We added tips and links that provide you with reference information in the tool, right there where you need it.

And we added that new progress tracker Karen mentioned so you can see how much left to enter in the estimator. That progress tracker is really helpful. As Karen said, it has titles. They help the taxpayer understand what they're being asked to enter in that section. So, you'll see a title like "income and withholding" and one for deduction, and one for tax credits. The progress tracker also helps you see the number of steps in the application. You can click forward to see what's coming up. You can go back and you can change information you've already entered. It shows you the steps that you completed and how much farther you have to go to complete the application.

Some other improvements include - we've added some error prevention messaging. So, it lets you know if what you've entered is a very rare tax situation. And also to let you know if you maybe - you've made an error, doesn't match with what you've entered already. We added date pickers.

And that means that when you're entering the date, you can still type in the date or you can use the calendar that comes up and just pick the date that way. That tool, the tool also helps to prevent errors when your answers don't match what you've entered previously. And the whole thing is now 508 complaints. And that helps ensure that the estimator is accessible to all users. We heard you when you said you wanted features that reduce taxpayer burden. Now you're going to find that each person's income is grouped. There will be a group or a section for income like one for wages and one for pension. And then it's also separated so that you've got a group for your income and one for your spouse's income. Also, separate group for self-employment income. And as I said, each spouse, if you're filing a joint return will have their own entry points. There's a quick bypass feature. So, if you don't have any adjustments or deductions or tax credits, you can just check the button which basically says "skip this section" and just go to the next section. And here are some more changes we made to help reduce taxpayer burden. We made it easier for taxpayers to tell line by line if they qualify for adjustments or credits. How do we do that?

Well, we split maybe of the adjustments into their own section. We provide helpful tips that let taxpayers know if they're qualified for various adjustments and credits. And we don't require taxpayers to manually total the amounts in a separate interface. The calculations are all done for you based on what you enter into the estimator. We mentioned specific adjustments to those with self-employment income to help them think about whether they might qualify for those adjustments. And we also mentioned several tax credits to those with dependents. Again, by seeing the list of credits they can look at the list and see if they qualify for them. And, finally, we improve the results page. The results page is now easier to read because it's going to give you not only text representation of your status but a visual representation of your status. The words are going to tell you what the results are but the visual helps you see what the results are right away. In the screenshot here, you can see the dial is all the way to the left, the owing side. We also improved the results page so that taxpayers know what the next steps they need to take are. And we'll be expanding on that new feature in a few minutes. We added recommendations on how to adjust withholding for each source of your ongoing income. The results page will tell you how to adjust your Form W-4 not only on your job but if you're filing joint, also on your spouse's job. If you have pension income, it will tell you how to adjust your Form W-4P before you give that to your pension provider. We provided a clear summary of what you entered so you can see exactly what you input. And that'll help you figure out when you, when you're looking at it, maybe you made an error when you're inputting your information and you need to change an entry. And this is a really great improvement. From the "results" screen, you can now just go back and make changes to a section without having to start from scratch and then reenter everything you had already input. OK. Now, let's show you first how to find the Tax Withholding Estimator on IRS.gov. They have several options on how you can find the Tax Withholding Estimator.

You know, right now, you can get to the Tax Withholding Estimator by clicking on the click in the "hot topics" section of IRS.gov homepage. So, go to IRS.gov, scroll down a little bit on the page and you'll see this graphic of the estimator. Just click on the picture. It'll take you right to the estimator page, landing page. But, sometimes our hot topics change. So, this graphic might not always be on the homepage at some point down the road, but you can always get there by just entering the URL in your browser, IRS.gov/withholding. And of course, a third option is to go to IRS.gov and enter the search term "withholding" or "Tax Withholding Estimator" in the search box.

Once you access the Tax Withholding Estimator using any of the methods I just mentioned, what you do is you get to the landing page for the Tax Withholding Estimator. And there's a lot of really useful information here. The first part of the page tells you why you should check your withholding and it also mentions that when you're done with the estimator, you might need to fill out a new form W-4 for your employer or a new form, W-4P to give to your pension payer. Scrolling down the landing page, you'll see the blue box where you launch the estimator. But before you launch it, look at the section above it. You'll see this section that says - that gives you tips for using this program. Now, I know. You see. Tax withholding estimator and the temptation is just click the blue button and get started. But, you know, take a moment to look at these tips.

Right there under the tips for using the program is a list of items you'll need to have while you work with the program. The estimator is going to ask you to estimate your current year income.

It's also going to ask you about items that will affect your current year taxes when you file next year which is the number of dependents that you claim, other types of income, adjustments and deductions that you usually fill in. So, before you begin, the tip suggests you gather a few items. You're going to want to have your most recent pay stub for each job you've had this year.

You'll also want to get paycheck stubs for any jobs held by your spouse if you're filing a joint return. And here's what you're going to look for on the pay stub. It should show your wages and withholding for that pay period, but you'll also want your total earnings so far this year and the total amount of federal income tax that's been withheld so far this year. Now, you're also going to want to have a copy of the latest Form 1040 tax return that you filed. This is going to help you estimate amounts for other items that affect your return, the adjustments, the deductions, and if there's any kind of other income that you normally have that you report on your tax return.

You need to keep in mind the estimator's results are only going to be as accurate as the information you provide. Now, for some people, their return from 2018 is a really helpful tool, because their income in 2019 is going to be very similar. For others, things change from one year to the next. So, when you take a look at your 2018 return and think about if anything's changed for 2019, do you have more income, less income, did you change jobs, did you start earning income from self-employment in 2019, maybe something in the gig economy. Did you recently start receiving a pension income or a Social Security income? They might not have on your 2018 return, but you're going to need to put them on into the estimator for 2019. So, take a moment. Think about how your situation's maybe different in 2019 compared to last year. This is going to help you come up with your best estimates for 2019 that you can and that will help because then your result will be more accurate. Now, there's another reminder on the landing page. While the new and improved Tax Withholding Estimator can be used by more people, there are still some people who will need to use IRS publication 505 which is the tax withholding and estimated tax publication. Some examples, of who might need to use pub 505 are people who owe alternative minimum tax, people with long term capital gains, significant long term capital gains and qualified dividends and people with more complex tax situations, also, people who don't have regular income subject to withholding. After all, the tool is called the Tax Withholding Estimator. And because the Tax Withholding Estimator isn't for everyone, it just works for more people, we did include a note on the landing page to let you know about Publication 505. The landing page also has a link to the Form W-4. In case your results indicate that you really should change your withholding and you want to get that new Form W-4 to your employer as soon as possible so they can make those changes that you need. If you delay, results aren't going to be as accurate and you might still end up being under or over-withheld. We also remind you here that if you change withholding in 2019, you really need to check again at the beginning of next year, changes made midyear can have a very different effect when you use them for an entire year. If you were to reduce your withholding in mid-2019, that might not work so well for all of 2020 and you might end up owing money on your 2020 tax return.

Or, if you increase your withholding midyear 2019, again, it might not work well if it was in place for all of 2020. You might end up having a whole lot more withheld than you need to and then you end up a refund that's larger than you wanted it to be when you file your 2020 tax return. So, the point here is you should check your withholding at the beginning of every year, and of course that's especially true when you made a change in the middle of the year. So, now we told you some things to look for on the landing page, once you have all the information you need, the next step, click on the blue button to launch the estimator. We're going to show you how that works in a minute. But, before we do that, Yolanda, I think it's time for our first polling question. RUIZ: Yes, it is, Sherry. OK. Our first polling question is who cannot use the Tax Withholding Estimator, is it: A) taxpayers receiving Social Security benefits; b) self-employed individuals and this would be a self-employed individual who has a job subject to withholding or has a spouse with a job subject to withholding and are filing a joint return; or, c) corporations; or, d) wage earners. So, please take a minute and review the question and click in the radio button that you believe most closely or correctly answers this question and then I'll repeat it.

Who cannot use the Tax Withholding Estimator, is it: A) taxpayers receiving Social Security benefits; b) self-employed individuals and this would be a self-employed individual who also has a job subject to withholding or has a spouse with a job subject to withholding and they are filing a joint return; or, c) corporations; or, d) wage earners. And if you did not get the polling question, please submit your answer using the Ask Question feature on your screen and we'll give you a few more seconds to make your selection. And, OK, I think we're going to stop the polling now and we'll share the correct answer on the next slide. And the correct answer is C, corporations. So, let's see what - how many of you correctly responded and I'm getting the results here -Oh, 94 percent. So, that's a great correct response rate. Karen, can you show us what happens when you launch the estimator? BREHMER: I sure can. Before we do this though, let me outline this scenario that we're using to you. Let me give you the details. In this example, we have a married couple filing a joint return. One spouse is self-employed and the other has wage income subject to withholding, they have three children, all of them are younger than 17 and they will not be itemizing. They're using the standard deduction. So, spouse two is completing the estimator and she's the one who earns wages. She couldn't find a recent pay stub. So, she did the estimator using an estimate of her wages and withholding. And then, as she was finishing up, she remembered where she put that pay stub and she was able to go back and correct the amounts, and you'll see how that works where she puts in her estimate, she finds her paycheck stub, and she goes back to correct her entry. So, let's see what it looks like as our taxpayer enters this information in the estimator. The next several slides show screenshots of what spouse two sees when she's entering their information in the estimator. Right away, you can see some big changes in the look and feel of the tool. It has a more modern appearance and there's helpful headers to help taxpayers understand the phase that they're in. The first page asks some general information questions about you and your tax return. We call it "About You" as you'd expect and the header says, "Select the information that best describes how you anticipate filing your 2019 tax return".

So, our taxpayer starts by entering the filing status that she expects to use when she files the return. As you make your selections, additional questions might be asked based on your earlier responses. Our taxpayers will be filing together. So, she selects "married, filing jointly" and this brings up the question "Can someone else claim you as a dependent on their tax return?" As you use the estimator, you'll see blue question marks. Blue question marks indicate that there's additional information on the topic. Just click on the question mark to expand it. Any additional information is displayed right there on the screen. So, you can just take a look at that reference material as you're using the tool. And our taxpayer wants to know more about this question, about whether she can be claimed as a dependent. So, she clicks on that blue question mark. So, additional information comes up explaining some of the common circumstances where a taxpayer could be claimed as a dependent on someone else's tax return. RUIZ: Karen, I see that there's a hyperlink within the box. What does that do? BREHMER: That's a good question. The hyperlinks take you to more detailed explanations or information on IRS.gov. The one on the screen here will take you to the interactive tax assistant on IRS.gov. There are many different interactive tax assistant tools and this one is about who can claim you as a dependent. So, when you click on that hyperlink, the additional information opens up in a new window and the benefit there is that you don't end up accidentally leaving the estimator before you're done. RUIZ: Karen, what if I open up another window to review some additional information or I get distracted in some way? Will the withholding estimator time out? BREHMER: That is another good question.

We've all had experience with programs like that that get so frustrating when things time out.

But I want to tell you. I've been working with this estimator for a few weeks now and I've been distracted and plenty of times I get involved in something else. And so far, it hasn't timed out for me even when I've been distracted or I've walked away from it for an hour or more. So, I don't think it times out at all. So, let's go back to our example. Once our taxpayer learns about this issue, she realizes that neither she nor her spouse can be claimed by someone else. So, she selects no. When she clicks no for the previous question, another question comes up and this one is about dependents and they do have dependents that they will be claiming. So, she answers yes.

And you'll see this as you move through the estimator. What you enter on each section determines what you're asked on later pages. So, she said yes. She is claiming dependents. So, that opens up a dropdown where she enters the number of dependents. Your options are 1 to 10 and in this case, the answer is three dependents. So, that's what she enters. If you had answered no, that you're not claiming any dependents, then that dropdown menu wouldn't show up on the screen. As you answer each required question, the next section will appear. RUIZ: Excuse me, Karen. Let me ask you a question. How do you know if a question is required? BREHMER: Yea. OK.

Let me explain that. The text is kind of small on this screenshot. So, I hope everybody can see it. But if you are required to answer the question, it says "required" in red right at the end of the question. And you can see that note at the end of the question "Do you plan to claim dependents on your tax return?" That's where it says "required". Another clue that a question is required is that the next question or the next section won't come up until you answer it. You can't proceed to the next section and it's going to highlight the part that you've missed or that you need to fill in. And once you have it filled in, you can proceed. RUIZ: Yes. That would be a good clue. BREHMER: That's right, hard stop, can't proceed until you answer the required question. So, let's move on. After dependents, there are questions about your income and your job. And the first question under income is whether either you or your spouse will hold a job with a regular paycheck subject to withholding. So, our wage earner has a job subject to withholding. So, she answers yes and that brings up the next question, how many jobs will you hold during the year. And here's where you could see another great improvement. You'll notice that there are separate boxes for jobs held by you and by your spouse. And we have two boxes here because she indicated she's filing a marriage filing joint return. If the taxpayer says they're filing single or head of household, they would only see one box for the number of jobs that they would hold during the year. And then, you want to use that dropdown menu to select the number of jobs that each person will hold. Your options are from zero to four. So, in our scenario, one taxpayer has a job with wages and withholding and the other has income from self-employment. So, our wage earner has one job. So, she selects one. And then, she selects zero for her spouse because in our example, the spouse doesn't have wages. The spouse is self-employed. The next question you'll see is whether you are receiving a pension and the taxpayers on our example don't have pension income. So, she answers no. But if either of them were receiving a pension, she would answer yes and there would be an option to enter the number of pensions received by each taxpayer. And after the answering the question about pensions, a dropdown box will appear for other sources of income. So, here you can indicate Social Security benefits, unearned income such as dividends, interest, annuities, alimony, unemployment and self-employment income to name a few.

RUIZ: Excuse me, Karen. If the taxpayer has Social Security income, will the estimator calculate the taxable portion or do you have to figure that out first? BREHMER: You do not. That is one of the great improvements that we've made. This estimator will automatically determine the taxable portion of Social Security. You don't have to figure it out. You don't have to know the rules about how much is taxable. The estimator will do that for you. RUIZ: I think that's great.

What about capital gains and qualified dividends. Those are taxed at a different rate. Can the estimator take that into account? BREHMER: Unfortunately, no. The estimator can't figure out the special tax rate that applies to qualified dividends and capital gains. So, if that's a significant portion of your income, then you'll need to use Publication 505, tax withholding and estimated tax, to check your withholding. RUIZ: OK. Well, I really like that. It calculates the taxable portion of Social Security. BREHMER: Yes. That is a very nice feature. And just to say again about the capital gains tax, if it's a significant portion of your income then maybe you should use Publication 505. But if your capital gains or qualified dividends are a smaller portion of your income, maybe you can go ahead and use the estimator and it would still be fine.

So, let's see how the taxpayers in our example complete this section. In our example, one spouse is self-employed. So, she'll check that box. They have none of the other items listed here. So, she won't check any more boxes. But again, if it was applicable, she could indicate if either she or her spouse receives Social Security benefits, unearned income from dividends, interest, annuities, alimony or even a distribution from a trust, taxable scholarships or grants, unemployment compensation, and earned income from other sources. So, except for the entries for Social Security benefits, there's just one box for the other categories of income. So, you might have to add up some items if you receive that type from more than one source like if you had interest and dividends, you'd have to add them up. But there are separate boxes for both you and your spouse for Social Security benefits and that's going to come up later with their own entry boxes. After the section on income comes the section on demographics. Taxpayers who are blind or over 65 are entitled to a larger standard deduction. So, the estimator has boxes you can check as those things apply, and you can see there are four boxes. You can check them if you are over 65, if you are blind, if your spouse is over 65 or blind. OK. So, that completes the "About You" section. I know it seems a little long based on the time that we took to explain it today and to show it to you. But when you're using the estimator, it really doesn't take too long. And also, the answers to these questions determine what you're going to be asked next in the following steps. So, it certainly is an important section. So, to continue, you just click on "next" and we're going to show you step two of the estimator. But before we do that, Yolanda, I think it is time for another polling question. RUIZ: I agree. And so, here it is. So, based on the information Karen just shared, what types of income can you input into the Tax Withholding Estimator: A, Social Security benefits; B, unemployment income; C, pensions; or, D, all of the above? And take a minute and click in the radio button you believe most closely answers this question and I'll go ahead and repeat the question. What types of income can you input into the Tax Withholding Estimator: A, Social Security benefits; B, unemployment income; C, pensions; or, D, all of the above? And if you're not getting the polling question, you can submit your answer using the Ask Question feature on your screen, and we'll give you a few more seconds to make your selection. And OK, we're going to stop the polling now and we'll share the correct answer on the next slide. And the correct answer is all of the above. So, let's see how well you did this time.

And we are calculating the responses here and we have 92 percent of you that responded correctly and that's still a great respond rate. Sherry, what's next? SAUCERMAN: Well, next, I have to come off of mute. I'm glad you clicked on next. You're taken to step two which is income and withholding. RUIZ: OK, Sherry. I see the circles that are in the red box. Do they have any other function other than showing where you are at in the process? SAUCERMAN: I'm glad you asked that, Yolanda. We call, those are the buttons that we're calling the progress tracker and it does serve several purposes. First, it helps users see how much more input and information they need to input. We completed step one. We entered the overall information about our return and that's indicated by the check mark there. Now, the progress tracker is showing that we have five more steps to complete. But you know, we can also use the progress tracker to move back and forth through the steps. We can jump back to a previous step if we need to correct information. All we have to do is click on the circle for that step, and then after correcting the information, we can jump back or really forward in the process to where we were without having to input everything again in between. RUIZ: Wow. That is a great improvement. SAUCERMAN: I agree. I used the withholding calculator many times and always had to go back and start over again. So, I really like this. The income and withholding step, that's step two, begins with questions about the job a wage earner has. That's the job that has withholding. Now, you notice there's just one job indicated, as she indicated, she only had one job. If you indicate that you'll have more than one job in a year, there will be separate questions for each job indicated and they'll be separately indicated. So, you'll have your first section for your first job and then another section for your second job and one for your spouse's job and so on. So, and for each of those jobs, you're going to be answering a series of questions. Now, the first question is whether you'll be holding the job all year. Our wage earner says yes. Now, if she'd answered no, she'd get a box or she could then enter the starting and ending dates of the job. RUIZ: Sherry, can you enter a date that is after the actual date that you're entering the information into the estimator? SAUCERMAN: Yes.

You can enter a date that you expect to hold this job all the way through December 31st. So, you could say "I started September 1st and expect it to end December 31st". Now, in our case, she'll be holding the job all year. So, she just enters yes and gets the next dropdown box "how frequently are you paid?" In other words, how often do you receive a paycheck from your employer?

You select how often you're paid from the dropdown menu and your options are weekly, every two weeks, twice a month, and once a month. I really like that they gave you the options twice a month and every two weeks. This is a big improvement over bimonthly or semimonthly because, well I know at least for me, I was never sure about those terms. Seeing every two weeks or twice a month is a lot clearer to me and I hope to everyone else as well. So, then you enter the date, your last pay period ended and this list of dropdown appears. RUIZ: Sherry, is that same date you received your last paycheck? SAUCERMAN: Not necessarily. It's the date that the paycheck goes to. But the information can usually be found on the pay stub that you're referencing. And this is where that pay stub that we talked about earlier really comes in handy. But before we move on, I do want to mention something about the date you enter here. Now, if you click in the box to enter the date, a calendar pops up and you can just click on a day in the calendar to populate the field. But if you choose to just type the date in yourself, please note the format is two digits for the month, two digits for the day, and four digits for the year. So, if you were entering September 1st of this year, you need to enter 09/01/2019. And this is indicated at the end of that question. RUIZ: Sherry, one more question. Does the calendar for the whole year pop up? SAUCERMAN: No, just the current month pops up, but there is a back arrow. It will take you to the previous month and you can go all the way back to the beginning of the year. RUIZ: OK, great. Thanks. So, now, I guess they need to enter all the information about the job. SAUCERMAN: Correct. So, what you're going to enter, you're going to enter what you expect your total gross wages for the year will be. So, yes, you do have to make some assumptions and as the estimator says at the top of the screen, use your best estimate for the year ahead. And most people would assume that their wages will remain the same for the remaining pay periods for the year. So, figure how many pay periods are remaining, multiply that time to the gross wages on your last pay stub and add that to whatever you've received so far in the year. You're also going to enter the total federal income tax withholding to date. That's the total amount of withholding from the start of the year. And you enter federal income tax withheld from your last paycheck and both of those items should be on that pay stub. If not, you might have to do some more math. Now, if you're making any pre tax contributions from your wages, you'll want to check these yes radio button. There's one question for tax deferred retirement plans, and a separate question for pre tax payroll deductions for items like flexible spending accounts, health insurance plans, and other items. We generally refer to them as cafeteria plans. Answering yes to these questions will then open boxes to enter the amount that you can see contributing for the entire year. However, the taxpayers in our scenario do not have any pre tax contributions. So, our taxpayer enters no to both. And now, you can click on the blue plus sign to enter information on other income. Now, in our scenario, we indicated in step one that spouse one had self-employment income. So, the boxes appeared to enter net income and estimated tax payment. This was the only type of other income indicated. If she indicated that they had other types of income, there would be boxes to enter those types of income also. So, our taxpayer enters how much they expect the net for the year and that will be total income minus expenses and how much they expect to pay in estimated taxes for the year. And then, we click on next to move on to step three. RUIZ: OK, Sherry. Before we move on to step three, if you indicated that there were sources of income other than wages and self-employment income does the tool provide fields for you to enter payments, you know, like it does for withholding from wages and estimated tax payments associated with self-employment income? SAUCERMAN: Good question, Yolanda. Now, if you indicate that you or your spouse is receiving a pension or Social Security benefits, you're going to be asked a lot of the same questions that you were asked for the - for when you indicate you have a job with wages. Will you receive this income for the full year? You'll get, it'll ask you about information from your last payment including amounts that were withheld. It's also going to ask what amount if any was withheld from unemployment. But the other types of income, they don't trigger a field where you can enter estimated tax payments.

RUIZ: OK. Thanks. So, what happens in step three? SAUCERMAN: OK. Step three deals with adjustments. Now, if you have self-employment income, the estimator is going to calculate self-employment tax and then automatically adjust for the deductable portion, and it tells you this right at the top, that red arrow that's pointing to the statement. But if you have any other adjustments you expect to take, you'll want to click the radio button for "see adjustments" and then the boxes will appear for those that might apply for your return. The estimator does provide some suggestions based on the information entered so far. And since the self-employed often also contribute to their own insurance and retirement plans and our taxpayer has self-employment income, right above the radio button, it does specifically ask, do you have any additional adjustments you would like to make such as: self-employment insurance deductions or contributions to a SEP, Simple or other qualified plan. As Karen mentioned earlier, SEP and Simple are types of retirement plans often utilized by the self-employed. Other adjustments that are available are student loan interest deduction, qualified educator expenses, deductions for contributions to an IRA or a health savings account which are not included in your payroll deduction. Alimony paid, if you were charged a penalty for early withdrawal of savings, moving expenses for members of the armed forces, and certain business expenses for reservist, performing artist, and fee-based government officials. Now, our taxpayers have no other adjustments in this scenario. So, after clicking the radio button go on to the next step, click next and bypasses the rest of the question. And on to step four. Now, step four covers deductions. Most people these days are going to take the standard deduction, but if you think you might want to itemize, you can just click on the itemize deduction radio button. It'll give you the list of itemized deductions and boxes where you can enter amounts that you expect you will claim. Now, our taxpayers know they're going to take the standard deduction. So, she just clicks the radio button for that option and clicks next. RUIZ: OK, Sherry. I have a question. If a married couple's total itemized deduction is less than the standard deduction amount for a married filing joint and they complete the itemized deduction, what will the estimator pick up? SAUCERMAN: Oh, good question. The estimator is going to use the greater amount. So, in that case that you mentioned, it would be the standard deduction. Now, there are some taxpayers that are unable to take the standard deduction. So, there is a check box to indicate that you want to itemize even if the amount is less than your standard deduction. You check that box and the estimator will use the total of your itemized deductions even if they're less than the standard deduction. And now, Yolanda, I think it's time for our third polling question. RUIZ: And yes it is. And here's our question. So, based on the information that Sherry shared, what information do you have to enter in the Tax Withholding Estimator if applicable, A, date of your last paycheck, B, standard deduction; C, adjustment for self-employment tax; or D, all of the above. So, please take a minute and click in the radio button you believe most closely answers this question. And I'll go ahead and repeat the question.

What information do you have to enter in the Tax Withholding Estimator if applicable, is it A, date of your last paycheck; B, standard deduction; C, adjustment for self-employment tax; or D, all of the above. And, again, if you don't - if you're not getting the polling question, please submit the answer using the Ask Question feature on your screen. And we're going to give you a few more seconds here to make your selection. OK. We're going to stop the polling now and we'll share the correct answer on the next slide. And the correct response is A, date of your last paycheck. OK. We'll see, we'll see how good you did this time. And we've got, let's see, we're calculating the result. And we've got 38 percen? Sherry, are you able to clarify this question a little bit for the audience? SAUCERMAN: OK. So, the question is what do you actually have to answer in the Tax Withholding Estimator. You check the standard deduction but you don't have to enter the amount. I guess the question must have been confusingly written or something. The Estimator will also automatically make the adjustment for self-employment tax, so you don't have to enter that amount into the estimator but you do have to enter the date of your last paycheck.

I hope that clarifies it for everyone. RUIZ: Thank you, Sherry. SAUCERMAN: Sorry it was not clear in the question. RUIZ: It was probably the way the question was worded, so we apologize for that. Karen, what happens next? BREHMER: Next, you answer questions about tax credits. I was looking at some of the questions that are already coming in and many of you asked about tax credits so I hope this section is helpful to you. Just like you can with adjustments and deductions, you can skip answering questions about credits if you want to by selecting "get my results without tax credits." Or you can see the list of credits that may apply to your circumstances. So, our taxpayers have three children so they're going to want to review the question about child and dependent-related credits, at least those, right? So, she clicks on the radio button for C, tax credit. In step one, our taxpayer indicated that they would claim three dependents and there would be credits associated with those dependents. So, first question here is to verify the number of dependents, three is correct. So, our taxpayer selects, yes. RUIZ: Karen, what happens if she says no? BREHMER: A box would appear that allows her to indicate how many dependents that she'll be claiming on the return. So, this is an example of one of those checks that are built into the system when the answers that you're giving don't coincide with other information you provided earlier. RUIZ: Oh, that's nice. Thanks, Karen. BREHMER: Yes.

No problem. That was a good question. And this is particularly really nice since you don't have to go back to step one to correct the error, you can just make the correction here in this step. And the next screen shows what happens once she verifies the number of dependents. This brings up the dropdown menu for tax credits that may be applicable based on the information that's been provided. Breaking these credits out as individual line items, that makes it easier for people to notice the credits that might be applicable and, of course, if you aren't sure about any of the credits, you can expand that section and get more information on the credit. So, in this example, the options that our taxpayers are given are the following - child and dependent-related; foreign taxes paid; educational; retirement savings; homeowner; elderly or disabled; business; alternative minimum tax credit; energy-efficient vehicle. Child and dependent-related credits are included because our taxpayer indicated that they would be claiming dependents on the return.

And if they indicated they did not have any dependents, the option wouldn't be available. And clicking on the blue plus sign, next to the title, expands that section. So, here is the list of child and dependent-related credits the taxpayers might qualify for. There are separate lines for each potential credit and next to each credit, there's that familiar - I hope it's familiar by now - that blue question mark that you can click on for more information regarding that credit and it also outlines the qualifications you need to meet. In our scenario here, all three of our taxpayer's children are under 17 and, therefore, qualify for the child tax credit. So, she selects three from the dropdown menu for the child tax credit. RUIZ: What if the taxpayer's children were over 17 and they wouldn't qualify for the child tax credit, but they can qualify for the credit for other dependents? Do you have to enter that information somewhere? BREHMER: Actually, no, you don't have to enter it. The calculator automatically calculates the credit for other dependents if there are more claimed than the amount indicated as being under age 17. And none of the other credits apply to our taxpayer so she scrolls down the page and clicks on next.

And that takes us to the final step - the result. The Tax Withholding Estimator improvements made the results page more easily digestible for taxpayer because, again, it gives you the text result and a visual representation of the result. In this scenario, based on the withholding and the estimated tax payments made, the taxpayers are going to have a significant bill come tax time.

They're going to owe over $3,000. In addition to indicating this on the left, they also have the very nice visual and the dial indicator is far to the left, the owing side. And the closer the indicator is to vertical, the closer the taxpayer is to an even tax return which means no tax owed or refund close to zero. And then below the results you get a nice chart that summarizes what you entered. And this is the point where the taxpayer remembers hey, I know where my paycheck stub is and she goes to get it and she compares it with the information summarized here and she realizes she needs to correct the information that she entered regarding her wages. So, to correct the information, she has two choices. She can use the back button that you see at the bottom of the screen on the left and she can just clicking back and she can walk back through the previous entries, that's option. And, again, that back button is on the bottom left hand side of the screen. Or another option is just to click on the button for the step where she needs to make the correction. You can do that by clicking on one of the buttons in the progress tracker, and that takes you straight back there so you can make your correction. In this case, she clicks the button for step two, income and withholding, and this is where, again, you can see the benefit of being able to use the progress tracker to make these changes, or even just to check to see what you entered even if you don't have to make any changes. And she gets to the screen For income and withholding. She makes her corrections to income and she doesn't have to re-enter any of the other information. The calculator makes the adjustment based on the new figures that she entered. Just like there are two ways to go back, there are two ways to go forward so that she can see the adjusted result. She could click next and keep clicking next to go through all the screens. You don't see the next button on this slide, but it would be there. So, she could click next and just keep going forward through all the screens to get to the adjusted result. I think that the second way is easier. She can just click on the result button in the progress tracker to get the adjusted result. So, here is the adjusted result screen and our taxpayers are going to owe less now that she has her corrected pay stub. But they're still going to owe a significant amount, so they're going to want to make some changes if they don't want to have to pay that much tax and possibly a penalty at tax time. They could make more estimated tax payments, that's an option. Or she can adjust her withholding, and the estimator will provide her with two options for adjusting the withholding. Option one will make suggestions to bring their balance due close to zero. But some people want to have more of a refund, so we added a second option. Option two makes suggestions that will provide the taxpayer with a small refund. Whichever option you choose, there's a link to Form W-4 provided with that suggestion and clicking on the link opens a blank W-4 in another tab. And, Yolanda, I think it is time for another polling question. RUIZ: Thanks, Karen. But before we launch into the next polling question, I have some questions for you. OK. Option two indicates the taxpayer would receive a refund of approximately $500 or more if they were to follow the recommendations here. What if they wanted a larger refund in - a larger refund, larger than $500? BREHMER: OK. That's a good question. Let's talk about that.

There certainly are taxpayers who want a larger refund and if that's the case, they can request that their employer take out an additional amount per paycheck. So, line six on Form W-4 is where you indicate any additional amount that you want your employer to withhold from each paycheck.

In our example, the estimator suggests entering $146 there. But if you want a larger refund, you could increase that amount. And then, another question is if you have more than one job and you need to make an adjustment, some people want to know if the estimator's recommendations make all the adjustments to just one job or does it spread the adjustments out. And the answer is it will actually spread out the adjustment for the job that you indicate so, you'd fill out a different W-4 or W-4P for each of your jobs. And I think now, Yolanda, it's time for our next polling question. RUIZ: OK. Great. Thanks, Karen. And now, we will launch our next polling question.

And it is, Improvements to Withholding Estimator include all of the following except A, automatically notifying your employer of a change in withholding; B, ability to revise information previously input; C, automatic calculation of self-employment tax; or D, mobile-friendly application. OK, audience, you should be pros by now so please take a moment and click in the radio button you believe most closely answers this question. And what I'll do right now is repeat the question. Improvements to the Tax Withholding Estimator include all of the following except A, automatically notifying your employer of a change in withholding; B, ability to revise information previously input; C, automatic calculation of self-employment tax; D, mobile-friendly application. And, again, if you're not receiving the polling question, you can submit your answer using the Ask Question feature on your screen. And we'll give you a few more seconds to make your selection. And so now, we're going to stop the polling and we'll share the correct answer on the next slide. And the correct response is A, automatically notifying your employer of a change in withholding. So, here let me see how well you did on this one. And, let's see here, so we have 93 percent that responded correctly. And that's a great correct response rate so I'm happy to see that. And so, next we will go on to Sherry. Would you tell us what happens if a person doesn't have enough withholding? SAUCERMAN: Sure and thanks, Yolanda. OK. So, if the estimator tells you you're not going to have tax withheld by the end of the year, then you should use the directions that the Tax Withholding Estimator provides to adjust your withholding on Form W-4. As we mentioned earlier, the results page does provide a link to the Form W-4 on irs.gov.

Now remember, you need to give that new Form W-4 to your employer and some employers or pension-payers may want you to submit W-4 changes electronically, so you need to check your employer to make sure you know how to submit the changes. And be sure and get that new information to your employer as soon as possible to increase your withholding. Remember, withholding takes place throughout the year, so the earlier someone changes their withholding, the more time there is for any changes in withholding to take place and they can take place more evenly throughout the rest of the year. In other words, there wouldn't be as big a difference in your paycheck if you need to make the change. Also, if you wait very long before you get the changes to your employer or pension provider, the result might not be that accurate. Now, some taxpayers are already withholding using zero allowances and you might be wondering what other options you have available to get the correct amount paid in or withheld from your paycheck or how you might be able to get, make payments in other ways. Well, there are multiple options, You can just have an extra flat dollar amount withheld from each paycheck and you indicate that on your Form W-4 or Form W-4P. For example, the employee can tell their employer to withhold an extra $200 per paycheck. You could also make estimated tax payments throughout the year. Now, for estimated tax purposes, the year has four payment periods and the taxpayer makes the payment each quarter. Now, for most people, the due date for the first quarterly payment is April 15th and then the next payments are dues June 15 and September 15 with the last quarter's payment due on January 15 of the following year. And if those dates fall on a weekend or holiday, their deadline is the next business day. Now, I realize it's past September 15th but you can still make an estimated tax payment for September. You might owe a slight penalty for making it late or, of course, the sooner you make it, the less that penalty would be. And don't forget that the final payment for this year is going to be due on January 15th, 2020. Taxpayers can pay online.

They can pay by phone or they can pay by mail. But the fastest and easiest way to make estimated tax payments is electronically using either IRS Direct Pay or the Treasury Department's Electronic Federal Tax Payment System otherwise known as EFTPS. Now, if you want information or other payment options, I recommend you go to irs.gov/payments or you can click on the silver tab for pay. If taxpayers underpays their taxes, then they have to pay an estimated tax penalty and that's going to apply whether they paid their taxes through withholding or through estimated tax payment or a combination. The penalty may also apply for late estimated tax payments even if you're due a refund when all is taken into consideration and you file your tax return. Now, in general, taxpayers don't have to pay a penalty if they meet any of these conditions - if they owe less than $1,000 in tax with their tax return or if throughout the year they paid the smaller of these two amounts either at least 90 percent of the tax for the current year or 100 percent of the tax shown on their tax return for the prior year. And this can increase to 110 percent depending on the taxpayers' adjusted gross income on their return. The IRS may waive the penalty if someone underpaid because of unusual circumstances and not just willful neglect. Now, as Yolanda mentioned before this webinar began and I know some of you may not have been on yet, the IRS is waiving the estimated tax penalty for many taxpayers if 2018 federal income tax withholding and estimated tax payment fell short of their total tax liability for the year. The penalty will generally be waived for any tax payer who paid at least 80 percent of their total tax liability during the year through federal income tax withholding, quarterly estimated tax payments, or a combination of the two. However, for 2019, that threshold amount will revert back to the 90 percent, you need to pay in at least 90 percent of the current year's taxes to avoid the withholding, I mean, the estimated tax penalty. Now, if the Withholding Estimator indicates that you have too much withheld, you can leave your withholding the same and you can get a large refund. But it you could use a little more money in your regular paycheck and you need to pay current bills, you can give your employer a new Form W-4 requesting less money be deducted from your paycheck. Again, you give the W-4 to your employer. Don't give it to the IRS. And remember, some employers want you to change your withholding by submitting that information electronically. You need to check with your employer to see what method they use. Now, to summarize it, estimator will help you determine how to first of all avoid an underpayment of tax and having to pay a bunch of tax with your return and maybe a penalty. But it can also help you avoid having a really large refund and just let you have more money in your regular paycheck.

It's going to offer you the two resolutions. Now, option one is the adjustments to make to get your balance as close to zero as possible. And option two allows you to choose a refund amount.

So, Karen, I'm going to turn it back over to you for the next section. BREHMER: OK. Great.

Thank you, Sherry. So, let's talk about why taxpayers should check their withholding every year. Taxpayers should check their withholding for a number of reasons - to protect against having too little tax withheld and facing an unexpected tax bill or a penalty at tax time next year; to avoid too much withholding so you can receive more in your paychecks throughout the year; and also because some of the tax law changes in the Tax Cuts and Jobs Act can affect your withholding. So these changes which took effect in 2018 could affect your tax liabilities for tax year 2018 and also future years. So by extension that's going to affect how much you will owe or the size of your refund when you file your tax return next year. So, we're encouraging everyone to conduct a paycheck checkup. If you did this earlier and found the withholding calculator didn't work for your circumstances, try this new tool. And remember the new Tax Withholding Estimator also allows you to consider your self-employment income along with wages and some retirement benefits. So checking now can help protect against having too little tax withheld from your pay and facing an unexpected tax bill or possibly a penalty at tax time next year. And it can also prevent you, your employees or your clients from having too much tax withheld. With the average refund topping, $2,700, some taxpayers might prefer to have less of a refund when they file their tax return and instead receive more money in their paychecks throughout the year. So let's talk about who should check their withholdings. Well, like I said, we say everyone should check at the beginning of each year. And the new Tax Withholding Estimator will help anyone who's doing tax planning during the year. Taxpayers who face unexpected tax bills or penalties when they filed this year should check their withholding. Again, finding out that you owe tax as when you thought you were going to get a refund is not a surprise that most people like. But not only should taxpayers be checking their withholding but we're also encouraging employers to encourage their employees to check withholding. And we're encouraging tax preparers to encourage their own clients to check their withholding. Adjusting a W-4 now can help avoid any unpleasant surprises when filing next year's tax return. And also, a reminder again, taxpayers who made withholding adjustments last year should check their withholding now. Taxpayers who changed their 2018 withholding should recheck their withholding in 2019. A midyear withholding change in 2018 might have a different full year impact in 2019. So if taxpayers don't submit a new W-4 for 2019, their withholding might be higher or lower than they intended. And also, taxpayers whose personal circumstances change should check their withholding. It's important for taxpayers to check their withholding when they experience a major life change. This could be things like getting married or divorced. If you have a child or adopt a child, if you are retired, you have a change in income or other changes. So if you have change in life circumstances, then check your withholding. So when we talk about who should check their withholding, there are a few groups of people who are most at risk of having too little tax withheld. And here is that list. It includes people who itemized in the past but now take the increased standard deduction, people in two wage earner households, employees with non-wage versus of income and those with complex tax situations. So every year, the IRS releases updated withholding tables that employers use to calculate the amount of tax to withhold from their employee's paycheck. And the tables are designed to produce the correct amount of tax withholding. The tables help people avoid under withholding and over withholding of tax, but it's really only for those with simple tax situations. When we say simple situations, we're talking about single people or married couples with only one job who have no dependents, who don't claim itemized deductions, adjustments to income or tax credits. But people with more complicated financial situations might need to revise their W-4 to get the desired amount of withholding. So here are some groups of people who should definitely check their withholding. This would be two income families. People working two or more jobs or who only work for part of the year. People with children who claim credits such as the child tax credit. People with older dependents, including children aged 17 or older. People who have previously itemized their deductions. People with high incomes and more complex tax returns. People with large tax refunds or large tax bills on their prior year return. And retirees should also check their withholding. You can see from that list it's a pretty good idea no matter what your circumstances are. Check your withholding every year. And as we mentioned earlier, a taxpayer's unexpected tax prize, a larger than usual refund, it might be due to life changes or it might be from tax law changes such as those included in the Tax Cuts and Jobs Act or TCJA. So, the TCJA made changes to the tax law and those changes affected our 2018 tax return and, of course, they're still in effect for 2019 and future years. So it's important to check withholding every year. Another thing to think about is just because the changes of TCJA didn't affect a taxpayer last year; it doesn't mean that they won't apply this year. That's something to consider. Here are some of the key tax law changes in the Tax Cuts and Jobs Act that affects your withholding. Lower tax rates for most taxpayers. The standard deduction has almost doubled and these amounts are adjusted every year. And the exemptions both personal exemptions and exemptions for dependents have been eliminated. And here are a few more changes from the Tax Cuts and Jobs Act. The child tax credit increased from $1,000 to $2,000 per child and the eligibility for the credit has been expanded. There is a new credit or other dependents and that might be an elderly parent that you can claim as a dependent or a dependent who's age is 17 or older. The credit for other dependents is up to $500 per dependent. Another change is that certain itemized deductions have been limited or discontinued. For example, the state and local tax deduction has been limited to $10,000 and that limitation applies to property taxes and either income or sales tax.

So to find out more about the withholding changes and how they affect your tax return, go to the IRS website and we have a page on tax reform. To find it, you can go to www.irs.gov and put tax reform in the search box or you can just go to www.irs.gov/taxreform. And that link is shown on the slide as well. So with that, Yolanda, I think it is time for our fifth and final polling question. RUIZ: Yes. I do believe it is. Audience, our last polling question is who among this group should check their withholding? Is it, A, people who owed on their last year's return; B, people who are not happy with the size of their last year's refund; C, people who took on a second job this year or, D, all of the above? So take a minute to review the questions and possible answers and click in the radio button you believe most closely answers this question. And I will go ahead and repeat the question. Who among this group should check their withholding - A, people who owed on their last tax return; B, people who are not happy with the size of their last year's refund; C, people who took on a second job this year or, D, all of the above? Again, if you're not getting the polling question, please submit your answer using the Ask Question feature on your screen. And we'll give you a few more seconds to make your selection. And OK, we're going to stop the polling now and we'll share the correct answer on the next slide. And the correct response is D, all of the above. So, let's see how you did on your last, on your last polling question. 98 percent of you answered correctly and that is an outstanding correct response rate.

So, Sherry, I'm going to turn it back to you. SAUCERMAN: OK. Thank you, Yolanda. Now, before we do open up this session to questions, I do want to go over some of the resources that we mentioned today. You can check your withholding using the Tax Withholding Estimator. And you can access it at www.irs.gov/withholding as you can see on the screen. Or you can just type Tax Withholding Estimator or withholding in the word search box on the IRS website. Now, of course, right now, you can access it from the hot topic section on our homepage. You can also go to the estimator landing page to find more resources about withholding, about estimated taxes and other methods of checking your withholding and making tax payments. Now, of course, if you decide that you need to change your withholding, you'll need to complete and submit a new form W-4 and give it your employer. And you can access the form from the Estimator. You can just pull it up or you can pull it up from our forms and instructions page or you can even just type in the URL irs.gov/w4. It will take you to the landing page for the form W-4. In addition, if you need to pay in more tax during the year and can't or prefer not to adjust your current withholding, you can make estimated tax payments and for that, you would use form1040 ES, which is estimated tax for individuals. You can pay estimated taxes by check, with the vouchers in the form 1040 ES or you can make the payments using IRS Direct Pay or by using EFTPS. That's the electronic federal tax payment system. And finally, for those with more complex situations, please review Publication 505. It has more detailed information on determining what's your withholding and what estimated tax payments you might need to make. OK. Back to you, Yolanda. RUIZ: Thanks, Sherry. Hello, again, it's me, Yolanda Ruiz. And I will be moderating the Q&;A session. And before we start the Q&;A session, I want to thank everyone for attending today's presentation on the Tax Withholding Estimator. Karen and Sherry are staying on with us. And they'll be answering your questions.

And if you haven't input your questions yet, there's still time, so go ahead and click on the ask button - Ask Question button and type in your question and click submit. And one thing before we start, we may not have time to answer all the questions submitted, however, let me assure you that we will answer as many as time allows. And if you participated to earn a certificate and related continuing education credit, you will qualify for two credits by participating for at least 100 minutes from the official start time of the webinar, which means the first few minutes of chatting before the top of the hour, they don't count towards the 100 minutes. Sorry about that. If you stayed on at least 50 minutes from the official start time of the webinar, you will qualify for one credit. And again, the time spent chatting before the webinar started doesn't count towards this 50 minutes. OK, Karen and Sherry, I hope you're ready. We received a lot of tough questions. They are coming in. So, let's get started, so we can answer as many as possible. And let me take a look at it. And I see the first question here. There are many questions here.

And I see - OK, this is for Karen, actually. I think it would be - well, actually, this is a suggestion. I think it would be helpful to have the estimator available on the IRS2Go app. And BREHMER: OK. RUIZ: Yes. BREHMER: Yes, I can address that. And there was another question that came in, people were saying where do we download the mobile Tax Withholding Estimator app.

So let me clarify that. The Tax Withholding Estimator is not an app that you download. If you go to irs.gov on your smartphone or your tablet, and you work with the Tax Withholding Estimator, it's now mobile friendly. So the page looks nice on your phone or looks nice on your tablet. But it's not a separate app. Another person mentioned the IRS2Go app. And actually, you can get to the Tax Withholding Estimator from the IRS2Go app. I just happen to have that on my phone. And I went to the IRS2Go app and there are a number of buttons on the bottom. I hit "Connect." Wait, I got myself goofed up. Oh, I hit "Connect." And I hit "Contact us." And from "Contact us," you'll see "Online tools" and when you get to "Online tools" you get to the - a number of online tools on irs.gov homepage and also the Tax Withholding Estimator is there. So, it's not a separate app. It is available from the IRS2Go app and it's mobile friendly. So it looks good on your phone or your tablet when you're using it. And that's all I've got on that one Yolanda. I hope that clarifies things for people. RUIZ: Great. Well, I have a question for Sherry. If your salary changed in the middle of the year, do you enter two jobs and enter the pay stub information for both? SAUCERMAN: OK. So your salary changes because maybe you got a promotion or something. It's still going to be the one job. What you've got is total income for the year, which would include your reduced income at the beginning of the year and then it just adds in to the increased income that you get because you got an increase in your salary. And then, of course, you would put in the amount of withholding from your - the latest paycheck and the amount of withholding to date. Now, if you know you're just about to get a salary increase, you would probably want to check again right after that salary increase so that you can be looking at there is my regular paycheck. You want to use the regular paycheck when you're figuring out this is my last paycheck and this is how much tax was withheld from that last paycheck. Now, if you had - you want to put in two jobs that maybe you worked one job for the part of the year and you changed to a different company, so it's not one - and got a different job and that was an increase then you would have two jobs - list two jobs. RUIZ: OK. Thank you, Sherry. I have a question for Karen. Can you enter W2 wages as well as estimated self-employment income, 1099 income?

BREHMER: Yes, you can. So I hope we illustrated that enough times during the webinar today, but just to review it, if somebody was let's just say single and self-employed. And that was their only source of income was self-employment. Unfortunately, you can't use the Tax Withholding Estimator in that circumstance. You'd want to use publication 505 to figure out how much you should do for estimated tax payments. But as long as somebody has wages plus self-employment income or pension income as well self-employment income, then they can use the Tax Withholding Estimator. It will help them figure out their tax on their wages in their self-employment income and help them figure out either that they should change their withholding on their W-4 or W-4P or also some people may choose to make estimated tax payments in addition. You can use that if you have wages and self-employment income. That's one of the improvements is that now those with self-employment income as long as they have wages or pension as well can use the estimator. I hope that helps answer that question. RUIZ: Well, thank you, Karen. And I have one for Sherry. Do filing returns require knowledge of future earnings? SAUCERMAN: Yes. What you're doing - filing returns, well, when you're filing the return it's after the end of the year, so you should know exactly what you earned in the year that you're filing for. So, I think what they're asking is when they're completing the estimator, would you need to know what your future earnings are. And yes, you would. You're going to have to estimate - as you're working on this that you're completing the estimator before the end of the year, so you may have to estimate how much you expect to have for the entire year, like if you were self-employed or if you have some other kind of income that you're reporting in the estimator or what you expect your wages to be at, by the end of the year. You do have to estimate that. And you're going to make the best estimate you can. RUIZ: Thanks, Sherry. And here is a question for you, Karen. I have several clients that fell short on their 2018 withholding because they did not update their W-4, all had less than 80 percent withheld, any 2018 relief for them for the first abatement of penalty basically?

BREHMER: Yes. OK. That's a good question. This person who asked the question already knows about this rule, but for everybody else, let me remind you. We've mentioned this earlier that the - to avoid the estimated tax penalty, you want to have 90 percent of your tax paid in during the year. You did through your withholding estimated tax payment. For 2018, the IRS changed that percent down to 80 percent. So if people had at least 80 percent withheld or 80 percent paid in with estimate, and they had an estimated tax penalty, the IRS is automatically abating that penalty. But the question we had here from this tax preparer is about people who had less than 80 percent withheld. And you're right, Steve, that they could apply for an abatement of penalty under the first-time abatement program. So, for tax preparers or taxpayers, you'd want to go to irs.gov and in the search box type in "first time abatement." And that's for you to learn more about that program to determine if it applies and what you need to do to get that penalty abated under the first-time abatement program. RUIZ: OK. Thank you, Karen. And I have a question for Sherry. If you're claiming an elderly parent on your return, how do you input this on the estimator? It only shows for children. SAUCERMAN: Actually, the estimator is asking how many are you going to claim dependents and how many dependents are you going to claim. So if your elderly parents are dependents, you would add them in when indicating how many dependents you'll claim on the return. Then when you go to the adjustments, it will ask you how many are under 17.

OK. Your elderly parents would not be included in the under 17. So, the calculator will take into account that you have this many dependents that are under 17, they would qualify you for the child tax credit. And the other dependents would qualify you for the dependents exemption for other tax - for other dependent - credit for other dependents. So, that's how you would indicate it. RUIZ: OK. These are great questions. Let's see, I have one here for Karen. Where do we download the mobile Tax Withholding Estimator app? BREHMER: OK. And as I mentioned a minute ago, it's actually not an app. It's not like you go to the App Store and download this app. It's just that this tool on irs.gov is mobile-friendly. So it views nicely on your phone and your smart - your tablets and also, there is an IRS2Go app that is an app that you could download in the App Store, IRS2Go. And you can access the Tax Withholding Estimator from the IRS2Go app. It takes a couple of clicks to get there, but you can access the estimator from the IRS2Go app. RUIZ: OK.

Thank you, Karen. And we have one for Sherry, is the estimator based on the new W-4 that is out in draft form or still the old W-4? And if it's still the old one, will it be updated once the new W-4 is finalized? SAUCERMAN: OK, yea. Now, so the estimator when you get to your results page is going to tell you what to put on your W-4. For 2019, if you're submitting a new form W-4, you're going to use the Form W-4 for 2019. I know we have a draft form W-4 out there for 2020, but it is a draft, not going to use that form to submit a new app, a new W-4 information in 2019.

You can't use that until it's no longer a draft. Never use draft forms to submit anything. It says it on the front, but people do it. So I always tell people when talking about a draft, you never use the draft to actually make a submission. So the estimator is telling you what to put on the 2019 form W-4 because that's the one you're going to use to make any changes in 2019. When we get the 2020, the Tax Withholding Estimator will be updated to reflect the tax - the taxing tables for 2020, all of the items for 2020 and will be updated to reflect where you put information on the 2020 form W-4. Good question. Thank you. RUIZ: Yes, it is a good question. Karen, this goes back to the question that I had asked you earlier. This is, why can't it - the estimator include if someone has dividends or capital gain? BREHMER: OK. So let me clarify that one. If a person has dividend income, or capital gain income, they can use the Tax Withholding Estimator and they can include the dividends and capital gains in there. The thing is though, what the estimator can't do is it doesn't figure out the special tax rate for capital gains or for qualified dividends. So I guess the way I look at it is if you use the estimator and you have some qualified dividend income, capital gain income that you get that special tax rate, and you use the estimator, it would actually show your tax being a little bit higher than it's actually going to be when you file. And if the estimator says that your - you have enough tax paid in or you're going to have enough tax paid in, well, then you know for sure that when you file for real and you get the qualified dividends rate or the capital gains rate, you're for sure going to have a refund and even a little bit larger than what the estimator assumed. We also say that if your capital gain income is a significant portion of your total income, then you really shouldn't use the estimator in that circumstance. You should use publication 505 to figure out your tax for that circumstance. RUIZ: Thanks Karen. Now Sherry, can you indicate estimated tax payments in the IRS estimator? SAUCERMAN: Yes. If you indicate that you have self-employed income, then it's going to have a box where you can put your estimated tax payments. Now, that is the only time that the estimated tax box actually pops up, is if you indicate that there is self-employment income. And one thing I did want to mention to, sorry, Yolanda is we were talking about the draft form 20 - W-4 for 2020, I was just reminded that we will be having a webinar on the draft form W-4 on October 22nd. So, some of our listeners may want to register for that on irs.gov. RUIZ: Great.

OK, Karen, is there a way that the estimator could send a message in early 2020 to tell someone to review their withholding for 2020? Again, they're referring to a mobile app here. BREHMER: Yes. That's an interesting question. I like that question because it gives us a chance to review something. The estimator doesn't ask you to input your name, your Social, your email address, or anything, no personal identifiable information is entered in the estimator when you use it. So that's why it's not possible for the estimator to be set up to send some reminder to use the estimator again in early 2020. So, for those people who have smartphones and they like to use their calendar feature in their smartphone, you might want to actually put a reminder in your smartphone, or if you have a good old paper calendar, you could also remind yourself that way.

But, again, when you use the estimator, you're not entering any personal information, not your name, not your Social, not your email, your cell phone number, you're not going to get a text message from irs.gov, from IRS ever, you're not going to get an email from IRS ever. So that's why this suggestion is kind of cool in a way, but it doesn't work because we don't ask for that kind of information. RUIZ: Paper calendars are the best, say the baby boomers, right? BREHMER: Right. RUIZ: OK. Sherry, the change from 90 percent to 80 percent I thought would apply to 2019, you say - you were saying 2020, what is correct? SAUCERMAN: OK. Now, if I said 2020, I apologize. I don't recall saying 2020, we're mentioning so many years, it does get confusing.

The relief that the IRS released saying that for estimate - if you paid in least 80 percent of the estimated taxes for 2018 or she filed it, you'd be - you'd be getting a penalty notice on that at this point because now in 2019 is when you file that return. If you only - if you paid in at least 80 percent, they are giving you relief from that estimated tax penalty. However, for beginning - when you file your 2019 tax return in 2020, you need to have paid in at least 90 percent of your tax on the return, or you could get an estimated tax penalty. Again, of course, that's 90 percent of your current year taxes, a hundred percent of the previous year taxes and in some instances, it's a hundred and ten percent. I recommend going to irs.gov and you can do a search for estimated tax payments - estimated taxes if you want to get a little more information on that. RUIZ: OK. Sherry, speaking of penalties, will the IRS penalize you for having a large refund? SAUCERMAN: No, we don't penalize you for having a large refund. We just recommend that if you - if you have a really large refund, and some people really want to have a large refund, but if you could use getting it - getting more money each, each pay period, then you might want to reduce that refund. But no, there's no penalty for having too large of a refund. RUIZ: OK.

Karen, back on capital gains and losses. So where do I enter a capital loss from the sales of securities? BREHMER: That is a good question. And I'm really glad that it came up because Sherry and I were talking about this yesterday when we were preparing. Let's just say that somebody had a couple of types of income that you entered together on one of the lines in the estimator, you enter interest, dividends, annuities, and capital gain. And I think total trust income on one line, that might be an example where you could net. So, let's say you had $5,000 of interest income, and you had $1,000 of capital loss, it would be OK to net those two and enter $4,000. So that works, as long as the result when you net is still a positive number. But it isn't possible when you have a - let's say you only had a capital loss of that kind of income, it's not possible to enter a negative like that in the withholding estimator. And, again, when Sherry and I were talking about this, we said it wouldn't be a good idea to take the capital loss away from your wages or away from your self-employment income because that would really mess up the result. So, the person does have a capital loss from the sale of securities, then they should use Publication 505 to figure out their estimated taxes or their withholding. RUIZ: OK. And I have a lot of interest here about the W-4 webinar. It's coming up. It's not on irs.gov yet, OK? So just look for that in the future. And let's see, we'll go on to the questions, the next question. And why do I get error, an error if both spouses are self-employed? It will not let you go past the pension question without an error. It will not let us advance from four of five questions. Is there a different calculator? And this is for Sherry. SAUCERMAN: Yes. So it sounds like the people that they're trying to put input income into the withholding - Tax Withholding Estimator and they don't have either a pension or a way - or a job for which there is withholding. In which case, you cannot use the Tax Withholding Estimator because the Tax Withholding Estimator is going to tell you how you change your withholding. So, yea, there's not a different calculator, what you're going to need to do is go to the Publication 505 and use the worksheets in the Publication 505. RUIZ: OK, thank you. Karen, I have a question for you. If a taxpayer is in college, does the estimator help her to determine if she qualify for the O - AOC? BREHMER: Yes. This is - so the AOC is the American Opportunity Credit and remember how we said that there's sometimes those blue question marks that lead you to more information? That's one resource that's available. And then sometimes the more information is displayed on the screen isn't enough information. And so there's going to be a hyperlink. And the hyperlink is going to lead you to additional information on irs.gov. And in this case, I believe it's going to send you to one of the interactive tax assistants, where it will help you figure out if you qualify for the American Opportunity Credit.

It was interesting, again, when Sherry and I were working with it, it's, like, "Oh, what does this blue question mark lead us to? Oh, look at that, that's fabulous." Or, "Where does this hyperlink go? Oh, that's great." So, you know, we were saying that when you're trying to figure out how to use it, and you're playing around with it, you find all this cool stuff that it does, and that's the situation here, that it helps you figure out if you qualify for credits by leading you to more information on the estimator itself or more information on irs.gov. RUIZ: OK, thanks Karen. So I have a question for Sherry, does the estimator allow taxpayers with interest and dividends to enter the data so that they will have more withheld to cover taxes on those sources of income? SAUCERMAN: Yes, that would be something that you would put in under other income. So when you expand that that you say, "Yes, I have other income." Expand that section and you can check that for other and unearned income. RUIZ: OK. And Sherry, I've got a couple more questions here for you. If both taxpayer and the spouse have self-employment income, do you add the amounts together to enter them? SAUCERMAN: Yeah. If you - and I'm assuming you're going to have to have - also, one of them is going to have to have either wages or pension. But then if they have two self-employed jobs, and they - then there's only going to be one box for the total self-employed income that's being claimed on that return, and the total estimated tax payments that are being paid in for the year. So, you would have to total them together and put them into one line. RUIZ: OK. And I have got a couple of questions as far as pension, does pension include Social Security? SAUCERMAN: No. There's a separate option, you click the box for pensions and under other income, it'll give you an option, are you getting Social Security? You check yes to that if you're getting Social Security and there's a separate line for, is your spouse getting Social Security? You check those and you'll have those boxes when you get to the income and withholding information where you can enter your Social Security for the year, pass the Social Security for the year and when you - when you start it, you're getting it for the whole year. All those questions that you get for the jobs and that sort of thing, you'll get those boxes if you check those. RUIZ: OK. And then there's another related question, how many pension items can be entered? Many retirees have a lot of RMD for multiple accounts, and I have a client with over 15.

Good for them. SAUCERMAN: The Tax Withholding Estimator only allows for four pensions for each taxpayer, so that would be eight total if you're filing a joint return. That - so that's all that it works in. Hopefully that works for most people. RUIZ: OK. Well, that's great.

Actually, that's all the time that we have for questions. And I want to thank you Karen and Sherry, you did a wonderful job. And thank you for sharing your knowledge, expertise and answering the questions. And before we close the Q&;A session, Karen and Sherry, what are some key points you want the attendees to remember from today's webinar? Karen, let's start with you. BREHMER: OK, great. Thank you. So, we just want to remind everybody about the key improvements implemented by the Tax Withholding Estimator, it is mobile-friendly, not an app per se, but it's mobile-friendly. It works for workers and retirees and self-employed individuals who also have a wage earning job or a spouse with a wage earning job. It allows the user to move back and forth through the steps, correct previous entries, and skip questions that don't apply. And it clearly explains what the taxpayer should do next. RUIZ: OK. Well, thanks, Karen. And Sherry, what's your most important points? SAUCERMAN: You know, as we've mentioned several times during today's presentation, it's a good idea to check your withholding early in the year because the earlier you can make any changes, the smaller a difference it's going to make in your take home pay. And you're also going to want to check your withholding anytime your circumstances change, and we aren't just talking about getting married or having a child, other items to consider are maybe you took a part time job over the holidays, or during the summer, that's going to affect your overall income and it can affect your tax. And don't forget, your children, they get older every year, so if your child turns 17 during the year, they're no longer going to qualify you for the child tax credits, that's going to change the bottom line on your taxes. And those are just a couple of the items that you should consider. And also finally, if you change your withholding midyear, you really want to be sure and recheck it in the following year especially if you reduce your withholding because a midyear change is not going to give you the same results as one that you make at the beginning of the year. OK, back to you Yolanda. RUIZ: Thanks, Sherry. OK audience, we are planning additional webinars throughout the year. And to register for an upcoming webinar, please visit irs.gov and keyword search webinars, plural, and you could select from webinars from tax practitioners or webinars from small businesses and we'll be offering certificates and CE credits for upcoming webinars. And you can visit the IRS video portal at www.irsvideos.gov and we want to remind you that continuing education credits or certificates of completion are not offered if you view an archived version of any one of these webinars. And, again, a big thanks to Karen and Sherry for a great webinar. I want to thank you, our attendees, for attending today's webinar on the Tax Withholding Estimator. And if you attended the total webinar - if you attended the webinar for at least 100 minutes from the official time, starting time, you will receive a certificate of completion that you can use with your credentialing organization for possible two CPE credits. And if you attended today's webinar for at least 50 minutes after the official start time, you will receive a certificate of completion that you can use with your credentialing organization for one possible CPE credit. And if you're eligible for continuing education from IRS and registered with your PTIN, your credit will be posted in your PTIN account. And for those of you that are eligible for continuing education from the California Tax Education Council, your credit will be posted to your CTEC account. And also if you've registered through the Florida Institution - Institute of CPAs, your participation information will be provided directly to them.

And if you qualify and have not received your certificate or credit by October 10th, please email us at cl.sl.web.conference.team@irs. gov. And the email address is shown on the bottom of this slide. And if you're interested in finding out who your local stakeholder liaison is, you may want to send us an email as well using this mail - email address and we'll send you that information. And we would appreciate it if you took a few minutes to complete a short evaluation before you exit. And if you'd like to have more sessions like this one, let us know. And if you have thoughts on how we can make them better, let us know as well. If you have any requests for future webinar topics or pertinent information that you'd like to see, for instance, in an IRS fact sheet, tax tip, or FAQ on irs.gov, then please include them in the comment section of the survey.

Click the survey button on the left side of your screen to begin, and if it doesn't come up, check to make sure that your pop up blocker is disabled. And it's been a pleasure to be here with you and on behalf of the Internal Revenue Service and our presenters, we would like to thank you for attending today's webinar. It's important for the IRS to stay connected with the tax professional community, industry associations, federal, state, and local government organizations, and individual taxpayers. You make our job a lot easier by sharing the information that allows for proper tax reporting. Thanks again for your time and attendance and we wish you much success in your business or practice, and you may exit the webinar at this time.