The changes to US Federal tax laws in 2018 created a lot of confusion, and many taxpayers did not realize that they were withholding too much tax or not enough tax until they prepared their 2018 tax returns this spring. Figuring out how much to have deducted from your paycheck has gotten more and more complicated over the years - in fact the Form W-4 will be modified in 2020 and it asks more questions than ever.
Time for a mid-year adjustment?
Recognizing that tax payers would benefit from streamlined help, the IRS has reworked its Tax Estimator Tool. 5 - 10 minutes spent today can help you avoid a nasty surprise next spring!
According to the IRS, the most important reasons for using this tool to do a mid-year check up on your personal situation are:
- Checking your withholding can help protect against having too little tax withheld and facing an unexpected tax bill or penalty at tax time next year.
- At the same time, with the average refund topping $2,800, you may prefer to have less tax withheld up front and receive more in your paychecks.