Since we are past the holidays, now are attention turns to taxes. \u00a0We begin the process of filing our personal and business tax documents. \u00a0The best thing for all W2 wage earners is to have the exact amount of owed taxes being withheld from each paycheck. \u00a0Since that is never a perfect situation, it is always best to be as close to perfect as possible. \u00a0A new year now gives you the opportunity to make sure you re-look and adjust your tax withholdings.<\/p>\n
Regardless of what happened last year, you need to take the opportunity to make sure you are on the right track this year with your withholding. \u00a0Not withholding enough will require you to come up with a potentially big amount of money that you do not have. \u00a0Withholding too much means you get a refund of YOUR money that the government(s) have been holding for you WITHOUT ANY INTEREST.<\/p>\n
What could you do with that extra money each month of you are getting a big refund.<\/p>\n
Now is the time to review your withholdings and make the correct changes to your W4.<\/p>\n
Each state will have a different process. \u00a0Search online or contact your state department of revenue for direcitons on how to assess your proper withholding.<\/p>\n
For federal taxes, or the IRS, visit the IRS website and run the “W4 Estimator”. \u00a0Feel free to run it multiple times and make sure you are entering correct information. \u00a0From the results, file a changed W4 with your employer to get the new withholding into the system.<\/p>\n
I strongly encourage you to run this same tool each quarter to make sure you are on track. \u00a0Additionally, run it each time you have a significant change in your income.<\/p>\n