Boost your paycheck with the IRS calculator
Did you receive a large tax return earlier this year? Internal Revenue Service officials say if you did, you may be able to get more money on that paycheck if you use a specific calculator.
The IRS is urging everyone to use its Withholding Calculator to help you identify your tax withholding to make sure you have the right amount of tax withheld from your paycheck.
According to the IRS, these are the reasons to check your withholding:
- Checking your withholding can help protect against having too little tax withheld and facing an unexpected tax bill or penalty at tax time next year.
- At the same time, with the average refund topping $2,800, you may prefer to have less tax withheld up front and receive more in your paychecks.
Using the Withholding Calculator will help you determine whether you need to give your employer a new Form W-4
If you are an employee, the Withholding Calculator helps you determine whether you need to give your employer a new Form W-4, Employee's Withholding Allowance Certificate. You can use your results from the Calculator to help fill out the form and adjust your income tax withholding. If you receive pension income, you can use the results from the calculator to complete a Form W-4P and give it to your payer.
The IRS says more than seven out of 10 people received refunds averaging around $2,800. Typically, taxpayers with larger refunds could get more of their money throughout the year, rather than waiting until tax time the following year.
The Tax Cuts and Jobs Act (TCJA) was enacted in December which made major changes to the tax law.
"Any of these far-reaching changes could have an impact on the refund many taxpayers will receive when they file their 2018 tax return," according to the IRS. "The IRS encourages every employee, including those who typically receive big tax refunds, to do a “paycheck checkup” soon to ensure they have the appropriate amount of tax taken out of their pay."
TCJA changes that could have an impact on tax returns:
- Reduced tax rates and changed tax brackets.
- Eliminated personal exemptions.
- Increased standard deduction.
- Expanded and increased Child Tax Credit.
- A new credit for other dependents.
- Some limited or discontinued deductions.
The IRS says to complete their "paycheck checkup" sooner rather than later because if there's a withholding amount adjustment necessary, there's more time for withholding to take place evenly throughout the year. If you wait, that means fewer pay periods to withhold the necessary federal tax; more tax will be withheld from each remaining paycheck.
"Adjusting withholding can prevent taxpayers from having too little tax or too much withheld," according to the IRS. "Too little withheld could result in an unexpected tax bill or penalty at tax time in 2019."
If you change your withholding for this year, make sure to recheck your withholding at the start of 2019-- especially those who reduced their withholding during 2018.
"A mid-year withholding change in 2018 may have a different full-year impact in 2019," IRS said. "Taxpayers who do not file a new Form W-4 for 2019, may have a higher or lower withholding than intend. To help protect against having too little withheld in 2019, IRS encourages all filers to check their withholding again early in 2019. "
The Withholding Calculator does not request personally-identifiable information such as your name, Social Security number, address or bank account. The IRS says they will no save or record any information that's entered into the calculators.
"As always, taxpayers should watch out for tax scams, especially via email or phone and be alert to cybercriminals impersonating the IRS," according to the IRS. "The IRS does not send emails related to the Withholding Calculator or the information entered in it."
For more information on planning ahead for this program or changing your withholding, visit the IRS website.
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