A government report was recently issued estimating 30 million people (over 21% of taxpayers) will find they have had too little federal tax withheld and will owe money when they file their 2018 income tax returns. As you may recall, the federal withholding tables were updated in March 2018 as a result of the Tax Cuts and Jobs Act passed in 2017. Employers should have had all employees complete a new W-4 in March, but the responsibility falls to each taxpayer to make sure they’re withholding the proper amount. Request a copy of your W-4 from your employer to ensure you’re using the 2018 version.
Due to the major tax law and the withholding table changes the IRS is urging everyone do a “paycheck checkup” as soon as possible. This paycheck checkup the IRS has recommend would involve working through the 2018 Form W-4 or working though the IRS’s Withholding Calculator that can be accessed through the IRS website at https://apps.irs.gov/app/withholdingcalculator/.
So now that we’re well into the dog days of summer (although it seems more like monsoon season) and you’re probably stuck inside with air conditioning anyway, what could possibly be more fun than to think about your tax situation? Take one of your missed opportunities to sit poolside or under the beach umbrella to do a paycheck checkup by visiting the IRS website and make sure you’re having the proper amount of federal income tax withheld from your paycheck.