BUFFALO, N.Y. (WIVB)– “Tax day” might be 8 months away, but if you want to avoid a shock on your next tax return some tax professionals are suggesting you give your tax withholding a mid-year check-up.
Despite last year’s federal tax cut, millions of Americans got a case of “sticker shock” when they filed their 2018 tax returns earlier this year. People who were counting on bigger refunds, often got less money back, or they ended up owing the IRS.
The bottom line is most Americans’ IRS tax bills were smaller last year, but it was the timing that caused the unpleasant surprise.
They would have had fewer taxes withheld from their paychecks throughout the year, instead of bigger refunds. In those cases, those wage earners probably barely noticed their take home pay had edged up.
In response to wage earners getting too little withheld from their paychecks, the IRS is formulating a new W-4 form to help employers figure out a worker’s total income rather than just their paycheck.
But Tim Eliason of EG Tax Service says, the new W-4 might seem to be prying deeper into taxpayers’ personal affairs than they would want to share with the government.
“Maybe you have a little home-based business that you make some extra money, maybe you are working nights somewhere. Maybe you are receiving dividends from some inheritance or things like that. That is all going to be turned in to the employer now with the new W-4.”
The IRS concedes, in an advisory, that new W-4 might need some work to be less invasive of taxpayers’ privacy.
As for this year, to get an idea of how you are going to come out your taxes, tax professionals say you might want to compare your latest paycheck to the withholding on last year’s paycheck for the same period of time.