Why it is Important to Double Check Your Paycheck
For today's #TaxTip Tuesday, let's talk about double checking the tax withheld from your paycheck! Why is this important? Because if you are not having enough tax withheld from your paycheck, you will owe Uncle Sam at tax time. Tax liability changes with major life events and new tax laws; it is always a good idea to double check what your paycheck says.
This time of year isn’t just about filing your taxes, it’s also time for Income Tax Preparation in Nashville. Are you sure the correct amount of tax is being withheld from your paycheck? Here is some advice, and quick tips from top-rated Financial Accountant in Nashville, Michael Morris.
Since the "Tax Cuts and Jobs Act" in December of 2017, the IRS has been slow to revise standard withholding tables. If you haven’t checked the withholding amount on your pay stub this year, be sure to double-check your paycheck. To A) Make sure these withholdings have made the correct adjustment and to B) plan your best income tax preparation strategy.
If you’re not having enough tax withheld from your paycheck, you will owe Uncle Sam at tax time. On the contrary, if too much tax is being withheld, you will get a refund. This is something we should all be aware of and adjust accordingly.
The IRS has a free tool: tax withholding estimator to checkup on paycheck withholdings and adjust for 2020, if necessary. This tool is free and it doesn’t hurt anything!
Use the IRS’ tax withholding estimator, especially if you fit any of these scenarios:
1. Two Income Families
2. People working two or more jobs or who work only part of the year
3. People with children who claim credits such as the Child Tax Credit
4. People with older dependents, including age 17 or older
5. People who itemize deductions in 2019
6. People with high incomes and more complex tax returns
7. People who have had any major life events such as new job or new member of the family
That free estimator tool again is: https://www.irs.gov/individuals/tax-withholding-estimator
But what is most important for your income tax preparation, is to start and maintain a filing system for the new year. This is where you can save your receipts and other information year-round that will be useful in filing income taxes next year. Doing this at the beginning of the year, will save you time and money.
With tax laws are continually changing, scheduling a free consultation with us will help you be as informed as possible. It’s important to understand your tax situation thoroughly so you can make the best decision regarding your income taxes. If you have any other questions about your Income Tax Preparation in Nashville, contact me at