Do You Need to Adjust Your Withholdings?
2018 saw massive changes to tax laws. As a result of the Tax Cuts and Jobs Act, the team at Broussard Poché, LLP is encouraging everyone to make sure the right amount of tax is taken out of your paychecks. In other words, it may be time to adjust your withholdings.
The new tax law could impact how much tax someone should have their employer withhold from their paycheck. The IRS is offering a “calculator” to help. The Withholding Calculator will help you determine the right amount for your personal situation. Having too little tax withheld can mean an unexpected tax bill or potentially, so it’s best to be sure.
Should You Check?
Everyone should check, but if you fall within the following categories, it’s imperative you look at your withholding amount.
- 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 age 17 or older.
- People who itemized deductions in 2017.
- People with high incomes and more complex tax returns.
- People with large tax refunds or large tax bills for 2017.
Before You Calculate
The Calculator will ask you to estimate your 2018 income, the number of children you will claim for the Child Tax Credit and Earned Income Tax Credit, and other items that will impact your 2018 taxes. You’ll want to:
- Gather your most recent pay stubs.
- Have your most recent income tax return handy
- A copy of your completed Form 1040 will help you estimate your 2018 income and other characteristics and speed the process.
After Using the Calculator
Once you use the calculator, you can make the necessary changes. If you need to make changes, complete a new Form W-4, or Employee’s Withholding Allowance Certificate. Then turn that W-4 into your employer.
For more details, check out IRS.gov.