Hello Striegel Knobloch & - Here Are Your Articles for Wednesday, October 03, 2018
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Is This Your Situation: Worried About Your Withholding

 

The IRS is urging all employees, especially two-income families and folks who work multiple jobs, to complete a paycheck checkup to verify that they're withholding the right amount of tax from their paychecks. This is important every year, but especially this year, as the tax reform package may have changed your situation.

Meanwhile, some experts are predicting that many employees are having too little withheld and may face a tax bill when filing in 2019. What should your next step be?

  1. Go to the IRS Withholding Calculator to navigate the complexities of multiple employer tax situations and determine the correct amount of tax for each employer to withhold. It takes into account multiple jobs and two-income families.
  2. Check your status regarding the following items: the increased standard deduction, the elimination of personal exemptions, the increased child tax credit, other limited or discontinued deductions, and changed tax rates and brackets.
  3. Submit a new Form W-4. This is the form that tells your employer how much to withhold from your paycheck.

Indeed, Form W-4 is key to proper withholding. Most people submit one when they start a new job and then forget about it. But you can, and should, fill it out as often as necessary, i.e., whenever there is a significant life change event. (Note that the IRS may be issuing a new Form W-4 later this year, and it may be very different from the current one.)

Here are the key issues to consider when filling out Form W-4:

  • Generally, the fewer withholding allowances an employee enters on Form W-4, the higher the tax withholding.
  • Entering 0 or 1 on line 5 of the W-4 means more tax withheld.
  • Entering a larger number means less tax withheld, which would result in a smaller tax refund, or potentially a tax bill or penalty.
  • Not having enough taxes withheld can occur when you get married or divorced, have a baby, or finally get that empty nest you dreamed about during your children's teenage years.
  • One of the most common under-withholding situations is the second-job scenario. To help you avoid the dreaded issue of owing taxes at the end of the year when you have two jobs, be sure to take into account second jobs and other special situations.

Does this sound confusing? It is, this year more than in any in recent memory. If you're unsure what your status is, give us a call and we'll help you figure it out. The sooner you do it, the better chance you have for good news when April 15 rolls around.

 

 

 
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Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
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