Have you done a Paycheck Checkup?
The IRS is urging taxpayers to do a Paycheck Checkup to make sure the right amount of taxes is being taken out of their pay. Taxes have changed due to the new tax law, so it’s a good idea to make sure you aren’t having too much or too little tax withheld from your pay.
To help you, the IRS developed a Withholding Calculator to assist with your Paycheck Checkup. While the calculator does NOT require personally identifiable information (like you Social Security Number), it’s a good idea to have these documents/information handy:
- Your most recent pay stub.
- You 2017 (or most recent) tax return (to help you estimate your total 2018 income).
- Cost of work-related child care.
If you are unfamiliar with tax forms, filling out the Withholding Calculator may take a bit of patience. We’ve tested it at hb&k and if you do not have to hunt down any information, it takes less than 10 minutes to complete. A helpful tip is to not add in any commas for the numbers (so type 1000 and not 1,000). Below you will find the 4 sections and a list of the items the Paycheck Checkup requires you to fill in.
You will need to fill in the following information:
- Filing status (single, married filing joint (MFJ), etc).
- Whether someone else claims you as a dependent.
- Number of jobs (if MFJ, include the total number for both spouses).
- Whether the job has been for the full year.
- Whether you contributed to a 401(k) or a cafeteria health plan.
- If you received a grant that needs to be included in gross income.
- If you are older than 65 or if you are blind.
Information about your Children
The new tax law made several changes to child tax credits. The maximum child tax credit increased from $1,000 to $2,000 per qualifying child and the maximum additional child also increased from $1,000 to $1,400. Additionally, a new $500 credit is available to benefit other dependents who may not be a “qualifying child”. More taxpayers can take advantage of this credit because the income limits increased to phases out at $400,000 for MFJ and $200,000 for singles (previously the limit was $110,000 MFJ and $75,000 for singles).
You will submit information for the following:
- Child and Dependent Care – how many children qualify and an estimate your work-related child and dependent care expenses.
- Earned Income Tax Credit – number of qualifying children.
- Other credits – fill in a number, if you expect any other credits related to your dependents.
Enter Income and Withholding
Here is where your previous year tax return and most recent pay stub come into play. Enter the following:
- Gross wages, salary and tips you EXPECT to receive in 2018 – this is the amount PRE-tax. Use your most recent pay stub.
- Any expected bonus. If you are unsure, it’s a good idea to enter what you got last year, if applicable.
- 401(k) and/or cafeteria plan contributions (these filed only show up if you selected them in the Basic Information page).
- 2018 tax withheld to date. Use your most recent pay stub.
- Federal income tax withheld from your most recent payment.
- How frequently you are paid.
- The months you’ve held the job for this year.
- Any non-wage income, such as a grant/scholarship or unemployment compensation.
In the final section of the Paycheck Checkup, you can fill in 2018 itemized deduction. This includes things like medical and dental expenses, gifts to charity, interest paid, etc.
Your Completed Paycheck Checkup
Finally, your Paycheck Checkup will be complete! The Withholding Calculator will tell you your anticipated tax for 2018, and what your overpayment or amount due is anticipated to be.
If you discover you will owe much more than anticipated, you can change your W-4 with your employer to help decrease the amount you will pay when you file your taxes. On the other hand, if you see you are getting a much larger refund than anticipated, you can either leave your withholding as is, or you can choose to get more in your paycheck right now by changing your W-4.
Click here to go to the Withholding Calculator. Please contact hb&k if you have any questions or advice on Paycheck Checkup or changing your W-4 form.