By Theresa Cagle Fry, Senior Vice President and Manager IRAs, Retirement & Education Planning
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As 2022 comes to a close, it’s a good time to check your withholding and estimate if you may be getting a refund or owe income taxes for the year, while there still may be time left to make a few adjustments. Nobody likes to have surprises when they file their income tax return and there is no reason to be surprised when it is quick and easy to do a paycheck check-up and review your withholding elections.
The IRS offers a Tax Withholding Estimator* to help you make sure you are having the right amount of tax withheld from your paychecks. Before using the withholding estimator, make sure you gather your 2021 income tax return and your most recent pay stub (your spouse’s too if you are married).
Depending on how many paychecks you have left in the year, you may be able to adjust your withholding election by completing a new Form W-4 and providing it to your employer. If you need to increase your withholding, you’ll want to take action as soon as possible to minimize the impact of the increased withholding on your remaining paychecks. You may also have an opportunity to withhold additional taxes if you are expecting a bonus before the end of the year.
A quick paycheck check-up towards the end of this year can also provide better insight on what your withholding election needs to be for the new year so you can take action if necessary.
*Tax Withholding Estimator | Internal Revenue Service (irs.gov)
Benjamin F. Edwards does not provide legal or tax advice, therefore it is also important to consult with your legal and tax professionals for additional guidance tailored to your specific situation.