Adjusting Tax Withholding. Be Careful that you don’t create your own IRS nightmare!

Share on Facebook0Share on LinkedIn0Pin on Pinterest0Tweet about this on TwitterShare on Google+0

If you find that you have to pay more taxes than you can afford, then your IRS Problems may have just begun. If the reason your taxes are high comes from your withholding taxes, now may be the time to make some changes.  Click here to read or watch more IRS Help resources.

When you start a new job you are required to fill out Form W-4 (Employee’s Withholding Allowance Certificate) indicating how many allowances you want to claim. This determines how much federal income tax is withheld from your pay during the year. This Form W-4 does not need to be re-filed unless you want to make changes to your withholding.

Reasons to Check Your Withholding

Your goal is to have your withholding match your actual tax liability. You will owe more taxes at the end of the year if enough tax is not withheld. If you have too much withheld then you have to wait for your refund check before you can spend the money.

If you have had changes in your personal or financial situation, you may want to adjust your withholding. These changes include:

Birth or adoption
Death of exemption
New residence
Change in job or loss of job
Interest, dividends, capital gains IRA distributions or deduction
Alimony expenses
Medical expenses
Gifts to charity

Changes in the tax laws could also affect your withholdings.

When to Check Your Withholding

You should check your withholding early in the year so if you need to make any changes it will take effect for the rest of the year. It will be especially important to check your withholding if you prepare your tax return and find that you either get a big refund or you have to pay more than you can afford at one time.

How to Check Your Withholding

The IRS Publication 919 (How Do I Adjust My Tax Withholding?) includes instructions and worksheets to help you figure out how many allowances to claim. You will use these to determine if you are having the right amount of tax withheld from your paycheck. If you find that you have not had enough tax withheld you need to file a new Form W-4 reducing your number of allowances. If you would rather have your money available during the year instead of receiving a large refund check than you need to decrease your withholding.

How to Adjust Your Withholding

As mentioned, to adjust your withholding you need to give your employer a new Form W-4. To increase your withholding you will either decrease the number of allowances or enter the amount you want withheld from your paycheck. If you want to decrease your withholding, you need to increase the number of allowances. Remember, you can only claim the number of allowances you are entitled to.

If you find a need to adjust your withholding, contact our office. The Best Lawyer on the Planet can’t help you if you don’t take the first step. Our knowledgeable staff can help you with the process or any other IRS Problems you may have.� Call us today.

Share on Facebook0Share on LinkedIn0Pin on Pinterest0Tweet about this on TwitterShare on Google+0