To unravel the mystery that is the American tax system you may feel like you need to have studied astrophysics and be well versed in legal speak. In reality, you just need to be able to closely estimate what your income will be in the coming calendar year, then find a tax estimator calculator online. Keeping in mind a few things along the way you can give yourself peace of mind about your tax withholdings doing the job you need them to do. Your goal will be to hit the right withholdings that will keep you from either owing a large amount of tax or getting a significant return for overpayment by the April 15th tax deadline.
Life Changes, So Should Your Withholdings
To quote one of the founding fathers Benjamin Franklin “in this world nothing can be said to be certain, except death and taxes.” This highlights the fact that life changed and when it does, you need to adjust. Adjusting your W-4 after certain life events will help you on your quest to elevate the tax season stress. The following are a few of the everyday activities that could trigger the need for you to adjust your W-4:
- Marriage
- Birth/Adoption
- Death
- Divorce
- Financial separation
- Job loss
- Significant income increase
You can print out a W-4 from the IRS.gov website and take it into your HR/payroll personnel after you complete the form. HR/payroll employees cannot advise you, only input the information you have provided to make the requested changes to your withholdings.
Don’t Go It Alone, Go to The Web.
One useful resource to fill out a W-4 form is https://apps.irs.gov/app/withholdingcalculator. Here you can answer some questions and figure out the numbers for your W-4 form and if you need to change your filing status. There are certain situations where you may need to have a more substantial amount withheld to avoid owing taxes at year end. Knowing which filing status fits your particular case will help ensure the proper withholdings. When you complete your W-4, there are different worksheets you can utilize to make sure you choose the one that fits our situation. Remember if you are receiving a large refund due to over-withholding you are giving the uncle Sam an interest-free loan in essences. That is money you could have in your paychecks instead, for any number of things.
Review your current W-4 you have on file with your employer to ensure you are on target with your tax withholdings.
