Why to Check Your Withholding
The IRS doesn't require you to file a return unless you owe money. However, it does allow you to deduct certain taxes from your income, such as state and local sales taxes, property taxes, mortgage interest, charitable contributions, student loan interest and some medical expenses. If you don't pay enough federal income tax during the year, you'll end up owing additional taxes later. You might think that paying less in taxes now means getting a larger refund later. Not necessarily. Some states and cities charge a fee on refunds, so even though you're not paying much in taxes now, you might still owe a lot later. If you want to see how much you've already paid in taxes, check your withholding. To do this, go to https://www.irs.gov/individuals/tax-withholding-estimator. You can learn about your filing status, exemptions and deductions, and find out what your tax liability is. Once you know how much you owe, you can decide whether you want to change your withholding amount or just make sure you're withholding enough.
Using the Tax Withholding Estimator from the IRS
Through the IRS website and Tax Withholding Estimator tool, you can estimate the federal income tax you want your employer to withhold from your paycheck. This is tax withholding. See how your withholding affects your refund, take-home pay or taxes due. To use this tool, you'll need:
Your results are only as accurate as the information you provide so be sure to input the correct information to the best of your knowledge.
When to Check Your Tax Withholding
When you have a major life event, it's a good idea to check your tax withholdings. This can help you stay on the same tax track as you were before your life change. Life changes that can impact your tax withholdings are a new job, major income change, marriage, childbirth and even a home purchase. If there are no large life changes, you can check your tax withholdings at the end of the fiscal year and make any needed adjustments on a new Form W-4: Employee's Withholding Certificate.
If you'd like more information about reviewing your tax withholdings, contact the office.
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This piece is designed to provide accurate and authoritative information on the subjects covered. It is not, however, intended to provide specific legal, tax, or other professional advice. For specific professional assistance, the services of an appropriate professional should be sought.
Review Your Tax Withholdings
October 25, 2022