Let’s see if we have this correct: ever since the first of the year, your paychecks have been a little bit different. You didn’t receive a raise and nothing else has really changed with your job, but it’s just not the exact same as 2017. And, if we can really be forthcoming (we’re friends, right?), you’ve noticed it’s a few dollars more than it used to be, but didn’t want to tell anyone in case it was a mistake and they came back looking for the money.
Here’s what’s really going on: subsequent to the new tax laws that passed in December, the Internal Revenue Service also updated the Withholding Calculator. They have suggested, and we concur, that it is a wise idea for everyone to follow that secure link and perform a quick check of your withholding. It’s a very user friendly form and shouldn’t take more than 10 minutes to complete.
Why should you check your withholding? The two most obvious answers are to make sure you don’t have too much or too little withholding.
- Too much withholding will result in you receiving a refund next year when taxes are due on April 15, 2019. While you might like the idea of a refund, also keep in mind your sweet Uncle Sam is holding your money all year. If that’s okay with you, it’s certainly okay with him!
- Too little withholding will result in a larger paycheck for you each time you get paid. However, it can also create an unexpected (and unwanted) tax bill on April 15th as well as potentially penalties from the IRS.
Okay, so now you understand why your check might be different and how to run a checkup to see if your withholding is where it should be. If it is accurate, you’re all set and there’s no action required on your part. What do you do if it’s not the right amount? It’s as simple as requesting that your employer change your withholding. That can be done very easily by filling out a new W-4 form. Please notice – this form was revised for 2018. If you have a previous version, please be sure to update your records.