Find out now – and reverse the damage – with a tax checkup.
In a recent Washington Post article, personal finance columnist Michelle Singletary urged everyone who pays taxes – and expects to receive a refund – to make sure enough is being withheld from each paycheck. The Tax Cuts and Jobs Act has resulted in a lot of changes – and some could shock taxpayers next year.
More than one in five taxpayers are likely not having enough tax withheld from their paychecks this year, according to analysis conducted by the Government Accountability Office. That adds up to a nasty surprise come tax time for millions of Americans.
As Singletary advises – and as we have advised as well – the way to head off the risk of getting a big tax bill next April is to do a tax checkup now.
“Do this soon, because we’re already more than halfway through the year,” Singletary writes. “If you find you’re going to owe, you’ll need to catch up by increasing your withholdings.”
Who is most likely to have too little tax withheld?
According to the IRS, you should definitely get a tax checkup if you fall into one of the following groups:
- You have itemized your deductions in the past, but may take the increased standard deduction this year instead. The Tax Cuts and Jobs Act significantly increased the standardized deduction as follows:
- $12,000 for individuals
- $18,000 for heads of household
- $24.000 for married couples filing jointly
- You and your spouse both work (you are a two-income family)
- You have income that is not covered by employer withholding
- You receive a pension
- Your tax picture is complicated
The IRS has free tools to help taxpayers find out whether enough is being withheld from each paycheck. The IRS Withholding Calculator helps you figure out what your end-of-year tax picture might look like. In order to take advantage of the calculator, you’ll need your 2017 tax forms, plus your most recent pay stub.
What if the calculator says I’m going to owe?
- First, double check your answers to make sure you entered them correctly
- If you’re unsure, check with a tax accountant
- If you are not having enough withheld, fill out and submit a new Form W-4 to increase the amount coming out of each paycheck
Gibbons & Gibbons can help
Wondering about your withholding? Contact us. We’re here to help. We can consult with you, and we offer a tax checkup service to new and existing clients. We can help you be sure you’re prepared for tax time.
Joe Gibbons, CPA is managing partner of Gibbons & Gibbons, P.C., a Northern Virginia-based accounting and business advisory firm that specializes in working with law firms and other professional service providers.