Check your W-4 Witholding!

I’m starting to see signs that some employers may not have updated their IRS withholding tables right. That means you could be in for a nasty surprise for 2018 tax season come April 2019. If you’re not sure you have to update the W-4 and you’re an existing client just upload your paystub and I will review it – we still have several months to correct your withholding! If not, just Contact Us.

What is the W-4?

This form lets your employer know how much federal tax to withhold from each paycheck. A taxpayer may want to have more or less withheld from pay in the back half of 2018 if the employer didn’t update the withholding tables correctly or if the Tax Act increases/decreases their tax.

When else should I look at W-4?

Significant life events like  marriage, divorce, the birth of a child, or buying a house. Of course you should Contact Us when those things happen throughout the year if you have questions.

Isn’t my W-4 updated automatically by X?

No, its not as you’re not required to file a new Form W-4 to your employer even though you can do so at any time. The new form for 2018 works the same as the old one – the more allowances you claim, the less tax is withheld. The withholding tables are supposed to be updated, but they may not have been updated or may be incorrectly updated.

Ok, who does this really apply to?

If nothing has changed, and you owe less tax due to the reforms then you’re probably fine. A general example of this would be someone who always takes the standard deduction. However, some taxpayers lost some benefits with the Tax Act so they need to have more tax withheld and their W-4 updated. For example, taxpayers who had dependent children age 17 or older would have claimed a personal exemption for them on their Form W-4. However, since the personal exemption is no longer available for 2018, they can no longer claim a personal exemption. They don’t qualify for the expanded child tax credit either since they’re child is over 17.

Ok, how do I update W-4?

Get the new W-4 from your employer. Talk to HR at your employer.

 

 

 

 

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