A Bigger Paycheck Could Mean You Owe The IRS At The End Of The Year
It's not too late to make adjustments! Here's what you need to know.
Getting a big paycheck is nice, but not so much come tax season.
Typically, about 18 percent of Americans are underwithholding and owe money to the IRS instead of getting a refund, according to Market Watch. But this year, the Government Accountability Office says 3 million more people are expected to join that 18 percent.
Tax attorney Michelle McCarthy, with Gantenbein Law Firm, says a majority of people expected to owe money to the IRS will be large families. That’s because of the changes made in the new reform.
“The loss of the personal exemption effects larger families,” explains McCarthy. “Because if you are just a family of two, your loss of a personal exemption is still a benefit because your standard deduction doubled.”
If you are single or married without children, McCarthy says you shouldn’t worry. You actually benefit from the reform.
Even if not enough money is being withheld, it’s not too late to make adjustments to ensure you don’t owe at the end of the year.
There are a few things you can do, including speaking with a CPA and having them crunch your numbers. Then, speak to your company about adjusting your withholdings. You would need to fill out the W4 form and ask to claim fewer dependents.
Whether or you’ll owe the IRS at the end of the year, McCarthy encourages everyone to save just in case.
Written by Annie Taylor for The Now.
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