The IRS is encouraging employees to review their paychecks to make sure employers are withholding the correct amount of taxes. Taxpayers who receive large refunds should consider adjusting their withholding elections to receive more money throughout the year, rather than waiting until they file their annual tax return.
Recent changes in the tax laws may impact employees' financial situations. Changes include
- Reduced tax rates and changed tax brackets
- Doubling of the standard deduction
- Removal of personal exemptions
- Revised child tax credit
- Elimination of certain deductions.
The IRS provides a withholding calculator that employees may use to review tax situations and make sure the amount withheld fits the employee’s needs. It helps employees decide if getting more money in each paycheck makes more financial sense than getting a refund, or if having too little tax withheld will result in a big tax bill.
The withholding calculator may be accessed by clicking here.
Employers may wish to share the tax calculator with their employees and encourage employees to check their withholding elections to make sure the election works for the employee’s personal situation.
