Calculating withholdings with Federal insurance premium assistance

[Cheshihime]

Hello,

I had approx $500 (over 600 once I paid TurboTax to file because I used the 1099-A) surprise in my last taxes. 

I was getting help from the federal government to pay medical and dental insurance premiums (cancelled them after this surprise as it almost ruined me). I think adjusting my withholdings will help but I don't know how much to withhold. I've tried calculators but I just get lost... I want to prepare better for next year so I can get insurance again without destroying my life financially.

How do I calculate how much withholdings to do to avoid paying a large amount in taxes thanks to this assistance with insurance premiums? (Where do I put the federal premium assistance credit amount in a withholdings calculator? Do I put the monthly or yearly amount? This is where I get lost in calculators like on the IRS site)

[JotikaT2]

I would recommend using our TurboTax withholding calculator.  It is only updated for 2024 but you can use it to estimate your withholdings for 2025.  Enter all of your information from your latest paystub.  Your entries in this calculator can then be used to generate a new W-4 Form.  Please note, you will not be able to enter the amount of any Premium Tax Credit on this calculator but you will be able to generate the amount that you should be withholding to get as close to your tax liability as possible.  If your situation changes during the year, you can simply use the calculator again and print out a new W-4 Form to submit to your employer.

Please see What is a W-4 Form for a more detailed explanation of how the form works.