Vincenza Vicari-Bentley, AFC
Did you get a big refund this year or did you owe taxes that you didn’t expect? Do you know how much your employer is withholding for taxes from your paycheck? A mid-year paycheck checkup for your 2021 taxes is important for staying ahead of the game and to make sure you are having the right amount of taxes taken out of your pay. No one likes surprises come tax time and this will hopefully eliminate that chance. It only takes a few minutes to do a paycheck check-up now.
This is especially important if there has been a change in your household (income changes, marriage, divorce, adoption, birth of a child, death etc.) Not paying enough during the year can result in a tax bill and perhaps a penalty if you didn’t have enough withheld, while withholding too much can create a refund when you file your tax return.
According to the IRS last year the average refund was about $2700. That could be an extra $225 a month in your paycheck instead of waiting a whole year to get that back (and without interest)! Check with your employer to see what your current withholding is and you can make changes using the (W-4) form. This form was redesigned in 2020 so if you’ve been with your current employer for a while it may pay to revisit the form. You can also use the IRS Withholding Calculator on IRS.gov. This tool is designed to help you determine the right amount of tax withheld from your paycheck. When the right amount is deducted, most or all of your taxes are paid by year’s end which means it can help you avoid overpaying on your taxes so you can put more money in your pocket during the year!
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