Get your checkbook ready, there’s a good chance you’ll owe the IRS in April. A new report by the Government Accountability Office revealed that many employers are withholding too little under the new tax law. So, while you’re enjoying a fatter paycheck now, you may be in for a nasty surprise come tax time. It’s estimated that more than 30 million taxpayers will be affected. Here’s how the IRS suggests you take action to minimize the blow.
Do a “paycheck checkup”
Before you start panicking, use the IRS Withholding Calculator to see where you stand. The process only takes a few minutes and mostly focuses on your income, tax credits and deductions. Therefore, you’ll need to have a copy of your most recent pay stub and tax return handy. Once you punch in the numbers from your documents, the tool will reveal your anticipated income tax for 2018. They’ll also state whether you’re on track to have a refund or owe the IRS along with the amount. This is assuming that you don’t make any changes.
Complete a new Form W-4
Now that you know you’re going to owe the IRS, it’s time to make your move. Fortunately, the IRS already has a game plan for you. In your results, you’ll find specific instructions for getting closer to your anticipated tax. To adjust your withholding, simply copy the IRS’s recommendations onto a new Form W-4 and submit it to your employer. Act fast because you want your changes to have enough time to make an impact. When the tax season rolls around, don’t forget that the fastest and easiest way to prepare your return is with ezTaxReturn.com.