The Tax Cuts and Jobs Act of 2017 caused quite a stir for many taxpayers. With all of the changes to deductions, credits and payroll withholding, many of you were caught off-guard and as a result saw lower than usual refunds – or worse, no refunds at all!
Fix Your Withholding Now! Now that you’ve filed your tax return and the dust has settled, it’s time to analyze your tax situation and ensure that you are withholding enough to cover your tax liability for 2019.
If you owed the IRS:
- Decrease the number of personal allowances on your W-4
- Have a set amount taken from each paycheck. To figure out how much, take the amount you owed and divide it by the number of pay periods remaining for 2019.
Major life changes are another good reason to review your withholding. Following are good reasons to review your payroll withholding:
- New Baby
- Buying a Home
- Investment Income (review your quarterly statements and make adjustments to increase withholding to cover the additional income)
Beware of bonuses: If you receive an annual bonus you may want request that you employer withhold a higher percentage so that you don’t fall short at year-end.
Each of these circumstances can affect the amount of tax you’ll owe and should prompt a “paycheck checkup” to make sure you’re having the right amount of tax withheld from your paycheck. The IRS has a withholding calculator to help you properly fill out your W-4 IRS Withholding Calculator and as always we are here and happy to help!