SO YOU GOT MORE MONEY IN FEBRUARY!
Caution: The Bump In Your Paycheck May Not Be All Yours!
The reason your check was bigger last month is because income tax brackets under the new tax law have changed. That means that the vast majority of American workers are enjoying more money in their pocket this year over last.
OK. So definitely cause to celebrate, but do so with a reality check to be sure there are no hidden surprises awaiting you this time next year … when you file your 2018 tax return. The surprise may be that you owe taxes rather than be “even” or anticipate a refund.
Reality Check
Your objective is to be sure that your employer is withholding the correct amount of federal taxes from your paycheck. The idea is to have your withholdings at least match your anticipated tax bill, thereby avoiding owing taxes or a penalty.
On a more positive note, you may find that it is more advantageous to have less withheld and enjoy more take-home pay.
Reality Check Tool – IRS Withholding Calculator
The IRS has made your reality check simple. Just use the newly released IRS Withholding Calculator. Here’s what to do.
Take just a few minutes to assemble the following information.
- Your W-2
- Most recent pay stubs.
- Your 2017 income tax return, Form 1040.
Then click here Withholding Calculator and answer a few questions.
Your Withholding Calculator results will tell you whether you should ask your employer to revise your W-4 information to minimize or eliminate any negative impact on your tax liability. Alternatively, you may find that you will continue to enjoy more take-home pay.
If you need to have your employer change your deductions, you’ll need to provide a new Form W-4, Employee’s Withholding Allowance Certificate, you can use your results from the Calculator to help fill out the form and adjust your income tax withholding.
Note: If your circumstances change during the year, revisit the Calculator to make sure your withholding is still adequate.
Questions: Pearson & Co. will respond promptly. Give us a call or drop an email.