How much are you withholding per paycheck? Is the amount too little? (Or too much?)
Find out the answer before 2018 ends; you may discover that you have not withheld enough—and a big federal tax bill might be in store for you next year if that applies.
Remember when you saw more money in your paycheck in February? This was due to federal tax reforms that were passed in late 2017. Those reforms also affected withholding.
Traditionally, your withholding exemption was figured this way: you filled out the W-4 form by putting “1” in the box for yourself, another “1” if you were married, and then “1”, “2”, “3”, etc. for the number of dependent kids in your household. Added together, these allowances determined your withholding exemption.1
The tax reforms changed things. Now, employees no longer get personal allowances, so if you are a W-2 employee, your withholding calculation needs to be revisited.2
Before 2018 ends, check your withholding on your paycheck to see if you are withholding enough or if you are withholding too little. This is especially important if you own a home, work for yourself, or itemize.
So, check your withholding—it might save you from an unwanted financial surprise.
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This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.
This material was prepared by MarketingPro, Inc.
1 – cnbc.com/2018/03/01/a-tax-related-action-every-employee-should-take-in-2018.html [3/1/18]
2 – forbes.com/sites/adp/2018/04/18/3-areas-where-employers-will-have-to-scramble-in-response-to-tax-reform/ [4/18/18]