When was the last time you checked your tax withholding, when you signed that W-4 eight years ago? There are multiple factors that largely affect how much you owe each year. Be mindful of potential refunds or taxes that you could owe.
Have you had any life changes recently? Certain events could lead to an exemption, adjustment, or credit on your next return. Here are a few examples of life changes that could affect your withholding:
- Marital status
- New child
- Retirement from military
- Began contributing to a cafeteria or pre-tax plan
- Employment status
Whenever you do go through a life change, be sure to fill out a new W-4 to your employer. They are used to calculate the federal income tax to be withheld from your paycheck. Editing your form later in the year, such as early fall, can give you enough time to adjust your withholdings before year-end.
Since the IRS is now required to hold refunds for some early filers claiming the Earned Income Tax Credit and the Additional Child Tax Credit, the withholding review is more significant. Additionally, with new precautions against identity theft and refund fraud, the IRS and the state tax administrators are lengthening the review time.
Check out the IRS website for more information on tax withholding.
Interested in learning more? Contact one of our professionals today.