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Employees Should Check Withholdings

Employees Should Periodically Check Withholding

Employees Should Periodically Check Withholding

Here’s a great mid-year tax tip for your clients’ employees: Review tax withholding to avoid having too much or too little federal income tax withheld from their paychecks.

The IRS encourages taxpayers to check withholding and to consider several factors that could affect the amount potentially refunded or owed next tax season. Having the correct amount taken out of a paycheck helps taxpayers get closer to a “zero balance” by the end of the year. Zero balance means to pay just the right amount – so there are no taxes owed and no refund due when they file their 2018 return.

A mid-year check-up is even more important now that the IRS holds refunds a few weeks for some early filers who claim the Earned Income Tax Credit and the Additional Child Tax Credit. Plus, the IRS says some of the steps being taken to protect against identity theft and refund fraud could delay some returns in 2018.

Major life events should also trigger a withholding review

Events that happen during the course of a year can impact exemptions, credits or adjustments that employees claim on their tax return. According to writer Kay Bell at Bankrate, taxpayers should consider a fresh look at their withholdings when they:

  • Get married or divorced
  • Welcome a new child
  • Buy a home
  • Take on a second job
  • Have a spouse who makes a job change

The list goes on, but these are some of the most common events that affect tax withholding.

How to make a change

Employees who need to make a change will need to complete a new Form W-4, (Employee’s Withholding Allowance Certificate), to change their withholding status or number of allowances.

 

Resources for employees

The IRS offers several online resources to help taxpayers bring taxes paid closer to what they owe. .

As always, if you have any questions, please reach out to your BenefitMall Sales Team.

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