Time for a Paycheck Check-Up?
Get a big refund after filing your federal tax return? That’s nice now, but you had to wait for Uncle Sam to send the money. Why not withhold less and boost your regular paycheck now?
Are you among those who pay more federal income tax than needed? According to the IRS, about 7 in 10 of us got refunds last year, meaning too much money was withheld from your paycheck. Ouch…a free loan to the government.
While your 2017 tax return is now history, you can get your money quicker next year by adjusting how much is withheld from each paycheck now. Making that adjustment is fairly simple: you file a new W-4 with your employer. This is the form you originally filed when you were hired. No one else can do this – only you.
Filing a New W-4
Unless you present a new W-4, your employer continues to withhold at the same rate. You may want to re-adjust that rate now, especially if you anticipate a bigger refund for 2018 due to the new tax law. While the IRS will provide employers new withholding tables that reflect tax law changes, it doesn’t hurt to check your specific situation.
To decrease (or increase) withholding, you simply adjust the number of allowances. The more allowances you take, the less the employer withholds from each check. You might start by increasing or decreasing your allowances by 1 more than you are making now (your employer will know how many you take now.) FYI…If you claim “0” allowances, you will have the most tax withheld from your paycheck.
2 Responses to “Time for a Paycheck Check-Up?”
My husband just switched jobs, and it’s kicked us into gear! We usually owe $1,000+ every year come tax time, so we adjusted his withholdings to (hopefully) make our owed amount less. I wish we had done this two years ago, but we were just being lazy!
No, not lazy at all! It’s so easy to “set it and forget it,” isn’t it? Some people like to get a big refund because they feel it’s like forced savings. But they often spend it when the refund comes! Kudos to you for making the adjustment with the W-4….fine tuning is the way to do it!