The Importance of Double-Checking Your Withholding Amount
The Tax Cuts and Jobs Act, which went into effect this year and so will affect 2018 tax returns filed next year, made significant changes that will affect how tax withholding is calculated. For instance, the new amendments increased standard deductions, discontinued other deductions, changed tax rates, increased the Child Tax Credit, and eliminated personal exemptions. Taxpayers who fail to take these changes into account when calculating tax withholding could end up making major errors on their next return, so if you are part of a two income family or work multiple jobs, you should strongly consider speaking with an experienced tax attorney who can help you double-check your paycheck and ensure that the correct amount is being withheld from your pay.
Calculating Tax Withholding
Calculating how much should be withheld from a paycheck can be difficult, especially for those who work for multiple employers. Similarly, families with two incomes should also check with their employers when making these calculations, as these are the types of taxpayers who are especially vulnerable when it comes to having taxes under-withheld or over-withheld. Taking this step as early as possible is important, as it gives taxpayers more time for withholding to occur evenly and correctly throughout the rest of the year. Those who wait, on the other hand, may have to deal with the consequences of having fewer pay periods to make changes, which could in turn, result in a bigger effect on paychecks. Fortunately, the legal changes that are most likely to affect the calculations of paycheck withholding won’t affect this year’s returns.
In the event that an employee discovers a problem with the amount being withheld from his or her paychecks, that individual will need to complete a new Form W-4 and then submit it to their employers. This is equally true for employees who have a change in personal circumstances that would reduce the number of applicable withholding allowances. In fact, in these cases, taxpayers are required to submit new Form W-4s with the correct withholding allowances to their employer within ten days of the occurrence. This is an important step, because the fewer withholding allowances an employee claims, the higher the amount that will be withheld from his or her paycheck. On the other hand, those who enter a larger number of allowances will have less tax withholding, but could also have a smaller refund or could even have a tax penalty issued against them.
While many taxpayers are content to leave these calculations to their employers without double-checking the information provided to them, those who do so risk having the incorrect amount withheld, which can have serious tax-related consequences down the road. To avoid this possibility, taxpayers who work multiple jobs or are part of a two-income household should make sure to double-check their tax withholding amount with their employer.
The Legal Representation You Deserve
To speak with experienced Florida tax attorney Ronald Cutler, P.A. about your own withholding-related concerns, please call 386-490-9949 today and a member of our legal team will help you schedule a free one-on-one consultation.