Avoid Tax Surprises: IRS Promotes #PaycheckCheckup
The Internal Revenue Service (IRS) has launched a #PaycheckCheckup campaign to remind taxpayers to check their federal income tax withholding now to avoid an unexpected tax bill or penalty at tax time. Employers can help by sharing this information with employees and directing employees to resources available on Tax Witholding and Tax Reform on the IRS website.
Recent changes to the federal tax code make it important to check your withholding now — especially if you:
- Are a two-income family;
- Have two or more jobs at the same time;
- Work a seasonal job or only work part of the year;
- Claim credits such as the child tax credit;
- Have dependents 17 years of age or older;
- Itemized deductions on your 2017 tax return;
- Have a high income or a complex tax return; or
- Had a large tax refund or large tax bill for 2017.
Taxpayers can use the IRS Withholding Calculator to do a quick “paycheck checkup” to check that they’re not having too little or too much tax withheld at work. The calculator helps figure out if you need to adjust your withholding. The IRS also posted a video on IRS Withholding Calculator Tips.
Taxpayers who need to adjust their withholding should submit a new Form W-4, Employee’s Withholding Allowance Certificate to their employers as soon as possible. As withholding occurs throughout the year, it’s better to take this step sooner rather than later because there is more time for withholding to take place evenly during the rest of the year.
Employees who have too little withheld are not paying enough taxes throughout the year, and may face an unexpected tax bill or penalty when they file next year. Waiting until later to make a tax withholding adjustment means more money comes out from each remaining paycheck.
People who have too much tax withheld will get less money in their regular paycheck. If those taxpayers change their withholding and enter more allowances on Form W-4, they’ll get more money in their paychecks throughout the year.