The Internal Revenue Service is asking taxpayers to check their withholding allowances in light of the changes to the tax law recently passed by Congress.
“For taxpayers that have simple situations, they’ve only got one income, they may not need to do anything,” said Michael Devine with the IRS. “People that have a little more complicated financial situation, like families that have more than one earner, single people that have two or more jobs, but maybe only work part of the year in some of those, if you claim the Child Tax Credit, if you’re a senior citizen and you’re getting Social Security and other kinds of income, you probably want to check.”
This is especially important for those who itemize their return and those with higher incomes.
“It would probably pay dividends for you to go ahead and go in to irs.gov and use the withholding calculator and find out if you need to file a new W-4 with your employer,” said Devine.
The W-4 is a physical piece of paper that you give to your payroll representative that tells them how much money to take out of your check so that you don’t owe taxes at the end of the year.
“You’re telling your employer how many allowances you’re going to claim on your tax return next year,” said Devine. “You’re going to say on this form, do you want to have more? I want to have the normal amount plus a little bit. I want to make sure I get a refund next year, so maybe an extra $50 out of every paycheck. Then you sign it, you give it to your employer, they give it to payroll and everything’s automatic after that.”
The withholding calculator is here.