For some, filling out their W-4 form when they were hired is a distant memory, however, it does impact your net pay and it always makes sense to review for accuracy as the number of “allowances” claimed impacts your take home pay.
It may be time to adjust your W-4 if:
- You owed the IRS money last year – You may want to increase the amount withheld to prevent this from occurring again as the IRS can assess a penalty for not depositing enough money into their account
- You’ve experienced a life change:
- Birth or adoption of a child
- Purchase of a home
- Refinance of a mortgage
- You expect to earn money from a home-based business or other source of income that does not withhold income taxes
- You’ve had a change in your itemized deductions:
- Medical expenses
- Charitable giving
- Dependent care expenses
- Education credits
- Child tax credit
To INCREASE the amount of taxes you have withheld from your paycheck, you will need to DECREASE the number of dependents you claim on your W-4. You can also specify a dollar amount you wish to have withheld. Likewise, to have LESS money deducted from your paycheck, you will need to INCREASE the number of dependents.
The IRS provides a withholding calculator at www.IRS.gov for you to run your scenario. You’ll need to have your most recent tax return and current paystub to use when doing so. I always suggest you speak with your tax preparer regarding any tax related questions that you may have.
Questions? Give me a call, 360-459-1200!