The IRS has added a new withholding calculator to its Web site. The calculator has been updated to reflect the new 2001 income tax rates that became effective July 1.
Using the withholding calculator, you can determine the appropriate federal income tax withholding for your income and deductions. If you need to increase or decrease your withholding, you can complete a new Form W-4, Employee's Withholding Allowance Certificate, and submit the form to your employer.
To use the withholding calculator effectively, the IRS recommends that you have your most recent pay stub and your most recent federal income tax return available.