BY MARK GRUBA
ROCHESTER, NY (WROC-TV) – Now is the time to check your paycheck to make sure enough money is being taken out to avoid owing the government money on your next income tax return.
CPA Michelle Staebell discussed what to look for and what to do Monday during News 8 at Sunrise.
“Fortunately the W-2 itself is not changing,” Staebell said. “It’s one of the forms that isn’t. But I still think that taxpayers are going to be surprised, or a lot of taxpayers are going to be surprised when they get their W-2’s in January. The numbers on them may be different than they’re expecting, so I think it’s important for taxpayers to look at their pay stubs now to avoid potential surprises later.”
Staebell explained that we’re far enough into 2018 that a taxpayer can project the withholding on their W-2’s or on their pay stubs. “Look at the year-to-date amount, add any remaining pay periods left worth of withholding and figure out the total amount being withheld for the year, because that’s usually the main factor for many taxpayers that determines on their tax return whether they get a refund or they’re going to owe with their tax return,” she said.
Staebell added, “With so many other changes going on with the tax reform, I think it’s really important to stay on top of it. One of the main changes was in January. Employers got new withholding tables, so they were withholding less from people’s paychecks. People were very happy about this. They saw more money in their paycheck. But I worry that some taxpayers now might not have enough withheld and they might need to make some changes before the end of the year.”
Once a taxpayer knows that withholding number there is more math involved to determine if that’s going to be enough to generate the refund. “There’s a nice tool on the IRS website called a paycheck checkup and that can be used for somebody who has a relatively simple tax situation to figure out what their tax will be compared to the withholding. If a taxpayer has a more complicated tax situation then they might want to hire a professional tax preparer to help them.”
If you determine that not enough money is being set aside for taxes in your paycheck, you can do something about it. “Anytime during the year an employee can fill out new paperwork with their payroll offices and have more taxes withheld,” said Staebell. “It’s a W-4 Form. The instructions were just updated on the IRS website. You can go out to their website. You can do a quick Google search. But fill out a new W-4 and give it to your payroll office or payroll department and tell them or ask them to increase the withholding being withheld each paycheck.”
Go to IRS.gov for more information on this topic, and for more information about “Smart Money” decisions from the New York State Society of CPA’s go to NYSSCPA.org/GetMoneySmart.