Will You Get a Tax Refund or Owe More?

The 2017 Tax Cut and Jobs Act made many changes, including some that impact the amount of taxes withheld from your paycheck in 2018. If you usually count on a tax refund, this year may be different due to those changes. The tables that provide employers guidance on the amount of taxes to withhold from your paycheck were adjusted to reflect the lower tax rates with the goal of putting more money in your hands, sooner. These tables are used along with the IRS W-4 (the withholdings form) that you complete when hired to set the amount they will withhold. If your personal situation changes throughout the year (marriage, divorce, new dependents, additional income, etc) and your employer isn’t aware, they will continue to withhold based on the last W-4 you completed.

Some people may be more impacted by the changes than others and should review their withholdings more frequently: two-income families, high income earners, those who previously itemized their deductions, have two or more jobs, work only part of the year, have dependents, complex tax situations, or had a large tax refund or large tax bill in prior years.

If you end up owing taxes this year, do a “paycheck checkup” by reviewing your withholdings as soon as possible for the rest of 2019. It is too late to make changes to your withholdings to change your 2018 taxes but you can still make withholding changes for 2019. The IRS offers a withholding calculator on their website to assist with filling out your W-4.

Still not sure if you should adjust your W-4? Read the full article here. BrightDime coaches are also available for questions, just login and chat.