Remember filling out a W-4 form when you were first hired? It’s the form that determines how much money your employer withholds from your paycheck to pay federal and state taxes—based upon the number of “allowances” that you claimed.
But have you checked to see if it’s still applicable? Consider adjusting your W-4 form if the following applies:
1. You owed the IRS money – You may want to have more money withheld from your paycheck. In fact, if you owe too much, the IRS can assess you and add a penalty for not depositing enough money into your account.
2. If you receive a “huge” refund. Consider changing your W-4 form so your employer can deduct LESS money from your paycheck and more money in your pocket monthly.
3. You’ve experienced a “life change,” such as
Marriage
Divorce
Birth or adoption of a child
Purchase of home
Refinance of mortgage
Retirement
4. You expect to earn money from your home-based business or other source that does not withhold income taxes from the check.
5. You have a change in itemized deductions.
Medical expenses
Gifts to charity
Dependent care expenses
Education credits
Child tax credit
To INCREASE the amount of taxes from your paycheck, you will need to DECREASE the number of dependents. You can also specify a dollar amount—like $50 per pay period. Likewise, to have LESS money deducted, INCREASE that number.
I recommend that you check your withholding every year—right after you’ve filed your income tax return. The IRS offers a withholding calculator at www.IRS.gov and you’ll need your most recent tax return and current paycheck stub. Or ask your tax preparer to help you adjust your withholding, so you don’t owe too much—or get a large refund from the IRS—at the end of the year.
Wanda Norge, CMA, CDLP
Certified Mortgage Advisor &
Certified Divorce Lending Professional
NMLS: 280102
Loan Zone Mortgage, LLC
28255 Hwy 74, Suite 202
Evergreen, CO 80439
Phone: 303-419-6568
Email: loans@wandanorge.com
Company NMLS: 1870102
Reprinted with permission from Donna Quisenberry. MyOwnEmailMarketing.com. 2024