Alyssa Hodges, CPA •
The IRS has been reminding taxpayers to do a Paycheck Checkup which can help individual W-2 wage earners determine if they are having enough tax withheld from their paychecks. This is particularly useful if you had a balance due for 2018 or have a change in 2019 and have not updated your W-4.
The IRS has been reminding taxpayers to do a Paycheck Checkup which can help individual W-2 wage earners determine if they are having enough tax withheld from their paychecks. This is particularly useful if you had a balance due for 2018 or have a change in 2019 and have not updated your W-4.
To do a Paycheck Checkup the IRS recommends using the IRS Withholding Calculator (but you can contact your accountant for help too!). In order to successfully use this calculator you should first get a copy of your most recent paystub. If you file your taxes Married Filing Jointly you should also get a copy of your spouse’s most recent paystub. The Paycheck Checkup also asks other questions that could impact the total tax on your return. If you have no significant changes from the previous year you may want to grab a copy of your 2018 return if you are not sure how to answer those questions.
When you complete the Paycheck Checkup the calculator will tell you how you should change your W-4s so that you have fully paid in your total tax at the end of the year.
However, you may not want to break even when you finish your tax return. If you want a refund of $2,000 and the calculator says you will have an overpayment in that range you do not need to change your W-4 allowances. If you do need to make changes but aren’t sure how to get your desired result, you can add additional withholding using a flat amount. For example, if you should use 2 allowances to break-even but want a $2,000 refund you would calculate the number of pay periods left in the year, say 10, and divide your desired refund by the number of pay periods. In this example you would leave the 2 allowances but also request that an additional $200 per paycheck be withheld.
For more information on Paycheck Checkups see IRS Newsletter IR-22019-112 and if you need to fill out a new W-4, see the 2019 Form W-4.
When you complete the Paycheck Checkup the calculator will tell you how you should change your W-4s so that you have fully paid in your total tax at the end of the year.
However, you may not want to break even when you finish your tax return. If you want a refund of $2,000 and the calculator says you will have an overpayment in that range you do not need to change your W-4 allowances. If you do need to make changes but aren’t sure how to get your desired result, you can add additional withholding using a flat amount. For example, if you should use 2 allowances to break-even but want a $2,000 refund you would calculate the number of pay periods left in the year, say 10, and divide your desired refund by the number of pay periods. In this example you would leave the 2 allowances but also request that an additional $200 per paycheck be withheld.
For more information on Paycheck Checkups see IRS Newsletter IR-22019-112 and if you need to fill out a new W-4, see the 2019 Form W-4.
