By Theresa Cagle Fry, Senior Vice President, Manager of IRAs, Retirement & Education Planning
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Nobody likes to have surprises when they file their income tax return. One easy way to estimate if you may be getting a refund or owe income taxes is to do a paycheck check-up and review your withholding elections while there still may be time left in the year to make adjustments.
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 2020 income tax return and your most recent pay stub (your spouse’s too, if you are married).
You can 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 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.
Benjamin F. Edwards & Co. 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.
*Tax Withholding Estimator | Internal Revenue Service (irs.gov)