06/26/2023 in Accountant

Tips to Get Your Tax Withholding Right on Your Paycheck

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If you’re experiencing chronic federal tax under withholding, there are several steps you can take to address and potentially fix the issue. Here’s what you can do:

  1. Review your W-4 form: Start by reviewing your W-4 form, which you submitted to your employer. This form determines the amount of federal income tax that is withheld from your paycheck. Make sure you have accurately filled out the form, including your filing status, allowances, and any additional withholding you may have requested.
  2. Assess your tax situation: Evaluate your overall tax situation. Consider factors such as changes in your income, deductions, credits, and any other tax-related circumstances that may have changed since you last reviewed your withholding. This will help you determine if your current withholding is appropriate for your tax liability.
  3. Use the IRS withholding calculator: The Internal Revenue Service (IRS) provides an online withholding calculator that can help you estimate the correct amount of federal income tax to withhold from your paycheck. This tool takes into account various factors and provides recommendations based on your specific circumstances. Visit the IRS website and search for the “IRS Withholding Calculator” to access this resource.
  4. Adjust your W-4 form: If the IRS withholding calculator or your own calculations indicate that you need to adjust your withholding, obtain a new W-4 form from your employer and make the necessary changes. Increase the number of allowances if you want less tax withheld or decrease them if you want more tax withheld. You can also choose to have an additional amount withheld from each paycheck by specifying it on the form.
  5. Submit the updated W-4 form to your employer: Once you’ve completed the new W-4 form, submit it to your employer’s payroll department. They will use the information provided to adjust your federal income tax withholding accordingly.
  6. Monitor your pay stubs and tax returns: After making changes to your W-4, monitor your subsequent pay stubs and compare them to your desired withholding. Additionally, review your annual tax returns to ensure that your withholding aligns with your actual tax liability. If you find that the under withholding issue persists, you may need to revisit the previous steps and make further adjustments.
  7. Seek professional advice: If you continue to face chronic federal tax under withholding despite your efforts, it may be beneficial to consult a tax professional or certified public accountant (CPA). They can provide personalized guidance based on your specific situation and help you navigate the complexities of the tax system.

Remember, the information provided here is general in nature, and it’s always advisable to consult with a tax professional for specific advice tailored to your circumstances.