After filing your tax return, you may be really excited or really disappointed about the outcome. The good news is, if you’re not happy with how things turned out you have the power to make changes and ensure you don’t have a repeat of the same next year.
The most common result that would make people want to make a change is if they owed a large amount at tax time. However, if you received a significant refund you may also want to make a change to give yourself a little extra in each paycheck throughout the year.
But you have to act now. How much you owe, or are due as a refund is a cumulative sum of every paycheck you get throughout the year. By the time you do your taxes, 2018 may already be 25% over. The sooner you make a change, the less invasive the change will be to your paycheck (especially if you owed money this year).
Change Your Withholdings
How your withholdings are set dictates how much in taxes is taken out of each paycheck. If you owed the government a significant amount, you would want to increase your withholdings so more taxes are paid from each check. If you got a massive refund, you might contemplate lowering your withholdings to have more money given to you throughout the year.
You can adjust your withholdings by filling out a W-4 form. You must fill out a separate W-4 for your federal tax withholdings, and your state tax withholdings. Many employers provide the ability to submit these forms online, however some require you to fill out a hard copy form and submit it to proper department.
Federal vs. State
You may not want to have the same tax withholding setting for federal and state. If you got a large refund from the federal government, but had to pay into your state government you may want to decrease your federal withholdings, but increase your state withholdings.
If the outcome of your tax return wasn’t to your liking, you can change your withholdings to take less, or more out of your paycheck to achieve the result you do want next year. You are in full control, you just need to give a little effort and submit a new W-4.
Let me hear from you, EOD Nation, have you adjusted your withholdings after getting a less than desirable result from your tax return?