Why You Should Check Your Withholding Status & Refund

Every year, millions of Americans go through tax-time shock. Some are pleasantly surprised after receiving a larger refund than they initially anticipated. While others learn they owe a lot more tax to Uncle Sam than what they filed in their reports.

To prevent this from happening to you this tax season, it’s important to know the sum you owe. It helps you bring the amount you filed closer to the amount you will need to pay. Here are some situations when it’s necessary to check your withholding and refund status regularly.

The Tax Cuts and Jobs Act

In 2017 the Tax Cuts and Jobs Act was passed in Congress. The Act has made some changes to tax law, especially when it comes to withholding the right amount of tax in 2018. It also increased the standard deduction and child tax credit, removed personal exemptions and changed tax rates.

Additionally, the Act might have affected your withholding status if you fall into one of these groups:

  • Individuals with two-income families;
  • Individuals who work two or more jobs;
  • Individuals who work only part of the year;
  • Individuals who claim credits;
  • Individuals who have older dependents;
  • Individuals with high income and complicated returns;
  • Individuals who itemized tax deductions in 2017;
  • Individuals who had large tax refunds or bills in 2017.

If you fall under any of these categories, make sure to check your withholding status and refunds before you file your taxes.

A New Job

When you start a new job, you also need to check your withholding status. Once you get settled in, fill out a new W-4 Form (Employee’s Withholding Allowance Certificate) and hand it to your employer. The form is used by your new company to determine how much income tax to withhold and deduct from your pay when they file your income tax.

Increase in Income

A general rule to remember is that the more money you make, the fewer tax exemptions you will be able to claim. If you have had a significant pay raise, you might not be eligible to receive the same amount of tax exemptions.

When this happens, you should check your withholdings. You might also find out why the raise felt like it was insignificant, when in fact the money has been allocated to taxes.

A Major Life Event Occurred

When significant events happen in your life, like the birth of a child, a change in marital status (marriage or divorce,) or a purchase of a home, you should check your withholding status. If you have experienced something of this nature, calculate the adjustment and submit a new W-4 Form before you file your taxes.

Let Professionals Help You

Here at Golden Tax Relief, we know how stressful it can be to deal with the IRS. Use our tax solution services to resolve all your tax problems quickly and efficiently.

Golden Tax professionals can help you check and adjust your tax withholdings status to avoid paying the wrong tax rate. Contact us to schedule your FREE consultation today.

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