It's Time for a Paycheck Checkup

W-2 and W2P CertificatesTaxpayers who haven’t checked their withholding this year should do so as soon as possible.  A "Paycheck Checkup" can help you see if you’re withholding the right amount of taxes from your paycheck. In general, this should be performed whenever there are major lifestyle changes like marriage or divorce, birth or adoption, new job or unemployment, etc. 
Major tax law changes should also prompt a paycheck checkup.  This year, the Tax Cuts and Jobs Act resulted in some taxpayers being surprised by a smaller refund,  an unexpected tax bill, and/or an underpayment penalty because they had not made the proper withholding adjustment in 2018.  

Taxpayers most likely to owe taxes include:

• Those who itemized in the past but now take the increased standard deduction.
• Two-wage-earner households.
• Employees with non-wage sources of income.
• Those with complex tax situations.
Recently, the IRS updated its Paycheck Checkup page that has multiple resources to help you "pay the right amount of tax as you earn it".  It features a expended list of tax situations that should trigger you to use the improved Tax Withholding Estimator.  Mobile-friendly, this new tool can be used by workers, retirees, students, self-employed individuals, and other taxpayers.  

User-friendly, this step-by-step tool allows you to:

• easily enter wages and withholding for each job held by the taxpayer and their spouse.  At the end of the process, the tool makes specific withholding recommendations for each job and spouse and clearly explains what the taxpayer should do next. The results can then be used to complete a Form W-4 and given to their employer(s).
• separately enter pensions and other sources of income received by the taxpayer and their spouse. The results can then be used to complete a Form W-4P and given to their payer(s).
Never be surprised again at tax season.  Control your refund size, avoid an unexpected year-end tax bill, or possibly a penalty when you file your 2019 tax return next year by regularly visiting the IRS Paycheck Checkup page and/or using Tax Withholding Estimator tool.  
"Here’s what taxpayers should know about the new IRS Tax Withholding Estimator", IRS Tax Reform Tax Tip 2019-111, August 15, 2019,
"Everyone should check their withholding", IRS, Tax Reform,  August 22, 2019,
Showing 0 Comments