Use your 2018 tax return to get 2019 withholding correct!
While many people did receive refunds last year, there were many more that were surprised in knowing that they were actually going to have to pay this year. The reason? They simply did not make adjustments to their withholding.
The good thing is that this surprise doesn’t have to be repeated and you have the information to make the adjustments needed now using your 2018 Tax Return.
Using this information, you can choose to get a smaller paycheck throughout 2019 and have a larger refund or get a bigger paycheck throughout the year and receive a smaller refund; it’s your decision.
Since you, as a taxpayer, need to estimate deductions, credits and other amounts for 2019, having a history of results and similar information from your 2018 return can make using the IRS Withholding Calculator to do a Paycheck Checkup and adjust your withholding for the outcome you want next year.
Can I do a Paycheck Checkup?
The answer to this question will depend on how complicated your situation is in regards to filing your taxes. For instance, being single, renting, with little or no investments or credits to claim, for most people it is relatively easy. But even this can become complicated depending on the status of your employment such as being self employed or contract labor. In addition, for those that may own a home or several homes, run a business, have investments, employees and more, it could be tricky and when it comes to protecting your investments it’s always best to consult an expert in such matters.
A few Tips before using the Withholding calculator?
Before you go to use the calculator we suggest you gather the following information and have it at hand.
The Calculator will ask you to estimate values of your 2019 income, the number of children you will claim for the Child Tax Credit and Earned Income Tax Credit, and other items that will affect your 2019 taxes. This process will take a few minutes.
Gather your most recent pay stubs.
Have your most recent income tax return handy; a copy of your completed Form 1040 will help you estimate your 2019 income and other characteristics and speed the process.
Keep in mind that the Calculator’s results will only be as accurate as the information you provide. If your circumstances change during the year, come back to this Calculator to make sure that your withholding is still correct.
The Withholding Calculator does not ask you to provide sensitive personally-identifiable information like your name, Social Security number, address or bank account numbers. The IRS does not save or record the information you enter on the Calculator.
IMPORTANT NOTE: This Withholding Calculator works for most taxpayers. People with more complex tax situations should use the instructions in Publication 505, Tax Withholding and Estimated Tax.
You can find the IRS Withholding Calculator by clicking on this link:
Finally, it is still a good idea that you sit down with a CPA as soon as you can to make sure that your calculations and the withholding adjustments you are thinking about making will actually give you the results you are hoping for in 2019.
For more information contact Steven Brewer & Company, CPA’s, PC at 812-883-6938