TurboTax 2019 - 2020 Withholding Guides and Support
Common lifestyle changes, like getting a job or getting married can alter your income as well as tax advantages which will change your tax liability. To avoid being caught off guard by an astronomical and unexpected tax bill, or a huge tax refund, you should adjust your paycheck withholdings as needed.
What's is a W-4, Why Should I Change It?
Every time your earn income changes, either for yourself, or your household, you’ll most likely see an adjustment in the taxes you owe. How much income tax you pay throughout the year is determined by your Form W-4 Withholding. Your employer deducts taxes from your paycheck based on the number of allowances you claim on your W-4. This is easy to determine if you're a “standard” taxpayer who claims the standard deduction, files single, and has one job. But for others in different tax filing situations, it's easy to have too much or too little tax withheld.
Single -vs- Married Filing Jointly; TurboTax Tax Withholding Adjustment Guide
Whenever you have too much money withheld from your paychecks, you end forking out too much cash and giving Uncle Sam an interest-free loan until getting your overpayment refunded. So I ask you, is there something better you could have done with that money for yourself? money. Taking home more money in your weekly paycheck can put you in the drivers seat as to what happens with that cash now! not after your refund.
Heck, even if you just invest the proceeds and earn interest on it, it may not be much but it's better than nothing, Right?
On the other hand, not having enough withheld from your paycheck could result in an unexpected and pricy tax bill and even a underpayment penalty.
TurboTax Guide To Preparing Your Employee W-4 Form For Your Employer
It's important to update your W-4 regularly to ensure you're paying the right amount of taxes throughout the year. Do this whenever significant personal life change occur. The goal should be to end up with a tax refund near zero, the perfect amount. However if you count on a big tax refund every year because you fail to save, you should still double check your withholding, because what's withheld directly impacts the size of your refund.
How to adjust your W-4 withholding
In just a few steps you can adjust your withholding on paper, or electronically. The
old-fashioned way is with the worksheets on the W-4 form. For more complicated
tax situations, you can use the instructions provided on the IRS Tax Withholding webpage.
An even easier way is to use the TurboTax W-4 Withholding Calculator. This simple tool makes determining your allowances easy. Just answer the questions and the withholding amount is computed for you.
If the result is different from your current withholding, ask your employer for a fresh W-4. You can claim as many allowances as warranted by your personal situation. Another way to increase your withholdings is to put the actual amount you want deducted on Line 6 (“Additional Withholdings”) of the W-4.
You can adjust your W-4 at any time during the year. Just remember, adjustments made later in the year will have less impact on your taxes for that year.