01 Sep W-4 Checkup

Now, is the time to perform a W-4 checkup to ensure enough taxes are being deducted from your paycheck. When filing your taxes, the last thing you want to hear is you owe Uncle Sam. That will definitely rain on your parade!

It’s a good practice to review your W-4 information when you experience major life changing events such has getting married or divorced, having a child, or a spouse passing away. The IRS recommends using the Tax Withholding Estimator which can be found on their website. It’s designed to help you determine if the right amount of taxes are being withheld. Aside from owing taxes or a penalty, individuals may have less taxes withheld so they can receive more money in their paychecks throughout the year.

The Tax Withholding Estimator will ask you different questions about your tax situation. Based on your responses, it will generate results you can use to update your W-4 information. It’s important to submit your changes as soon as possible to ensure your tax deductions are correct. If you submit changes closer to the end of the year, you may not have enough to time for the desired amount of taxes to be withheld.

In most cases, the Tax Withholding Estimator will work for the majority of individuals. If your tax situation is a bit more complexed, the IRS recommends using the instructions in Publication 505 – Tax Withholding and Estimated Tax. So, there you have it in a nutshell. Do your due diligence to avoid owing Uncle Sam that potential vacation money!