Have you given your paycheck a checkup?
This week (March 26th - 30th), the IRS is holding a weeklong campaign to encourage everyone to check their tax withholding.
Certifed Financial Planner™ and SHP Financial Co-Founder, Matthew Peck, talked with WJAR about who should check their tax withholding and how to do it.
Here are some of the points Matt made:
WHY IS THIS AN IMPORTANT STEP?
You will thank yourself come April, 2019 if you take the time now to check your withholding. If you are withholding too much out of your paycheck, you will get a big refund next year. That may sound like a good thing, but it’s really not. That’s your money the government is holding interest free. It’s money that you could be investing to grow throughout the year. However, if you withhold too little, you’ll owe at tax time. Ideally, you want to have just enough withheld so that the amount will come as close as possible to your actual tax liability for the year.
WHO SHOULD BE DOING A PAYCHECK CHECKUP?
Anyone can benefit from a paycheck checkup, but there are a few groups who should especially consider taking this step:
- Anyone with a complicated financial situation
- Two income families
- People who hold more than one job
- Anyone who itemized deductions in 2017
- People who claim credits like the Child Tax Credit
WHAT STEPS CAN YOU TAKE TO CHECK YOUR WITHHOLDING?
- Get your most recent pay stub from work.
- If you’ve finished your 2017 taxes, have those handy as well. If not, get out your 2016 taxes. (source: IRS)
- Enter the information into a calculator from the IRS - Click here for the IRS calculator
- If the calculator shows your withholding is off, fill out a W-4 with your employer as soon as possible.
Click below for our 2018 Tax Reform Guide