With all the tax reform changes and reduced income tax withholding for most taxpayers, there’s growing concern that while more take-home pay is great now, it could mean an unpleasant surprise at tax time next year.
This is why you need to be extra cautious about your payroll withholding. One glance at the W-4 instructions can make anyone’s head spin, especially if you’re not trained in taxes. Spoiler: it’s not business as usual.
What adds to the problem is that many taxpayers count on a refund to pay property taxes, insurance, and other large expenses. The W-4 worksheets are designed to withhold the correct amount of tax with no substantial refund, and many tax practitioners are reporting that clients’ withholdings have been reduced to seriously low amounts.
In other years, most taxpayers can look at the tax from their prior year’s return and compare it to their projected payroll withholding to see if their current withholding amount is appropriate. But some taxpayers with multiple jobs, a working spouse, or complicated returns will find it difficult to adjust their withholding to achieve the desired results.
The same problem exists for retirees with pension income, the difference being that they use a W-4P instead of a W-4.
💡 Taxpayers with Multiple Jobs
In other years, most taxpayers can look at the tax from their prior year’s return and compare it to their projected payroll withholding to see if their current withholding amount is appropriate. But some taxpayers with multiple jobs, a working spouse, or complicated returns will find it difficult to adjust their withholding to achieve the desired results.
The same problem exists for retirees with pension income, the difference being that they use a W-4P instead of a W-4.
Get Help Projecting Your Taxes
If you want a clearer picture of your potential tax refund or need help tweaking your payroll withholding, give us a call. We’ll help you avoid surprises—and make sure you’re still in control when tax season rolls around.