Get an Early Tax “Refund” by Adjusting Your Withholding

14 05 2018

Get an Early Tax "Refund" by Adjusting Your Withholding

Each year, millions of taxpayers claim an income tax refund. To be sure, receiving a payment from the IRS for a few thousand dollars can be a pleasant influx of cash. But it means you were essentially giving the government an interest-free loan for close to a year, which isn’t the best use of your money.

Fortunately, there’s a way to begin collecting your 2018 refund now: You can review the amounts you’re having withheld and/or what estimated tax payments you’re making, and adjust them to keep more money in your pocket during the year.

Choosing to adjust

It’s particularly important to check your withholding and/or estimated tax payments if:

  • You received an especially large 2017 refund,
  • You’ve gotten married or divorced or added a dependent,
  • You’ve bought a home,
  • You’ve started or lost a job, or
  • Your investment income has changed significantly.

Even if you haven’t encountered any major life changes during the past year, changes in the tax law may affect withholding levels, making it worthwhile to double-check your withholding or estimated tax payments.

Making a change

You can modify your withholding at any time during the year, or even more than once within a year. To do so, you simply submit a new Form W-4 to your employer. Changes typically will go into effect several weeks after the new Form W-4 is submitted. For estimated tax payments, you can make adjustments each time quarterly payments are due.

While reducing withholdings or estimated tax payments will, indeed, put more money in your pocket now, you also need to be careful that you don’t reduce them too much. If you don’t pay enough tax throughout the year on a timely basis, you could end up owing interest and penalties when you file your return, even if you pay your outstanding tax liability by the April 2019 deadline.

Getting help

One timely reason to consider adjusting your withholding is the passage of the Tax Cuts and Jobs Act late last year. In fact, the IRS had to revise its withholding tables to account for the increase to the standard deduction, suspension of personal exemptions, and changes in tax rates and brackets. If you’d like help determining what your withholding or estimated tax payments should be for the rest of the year, please contact us.





IRS Starts 2015 Tax Season on Time

16 01 2015

The Internal Revenue Service will begin accepting and processing tax returns on Tuesday, January 20, 2015.

The IRS expects to issue more than nine out of 10 refunds within 21 days. The fastest way to get a refund is to e-file and choose direct deposit. It takes longer to process paper returns and in light of IRS budget cuts resulting in a smaller staff, it will likely take an additional week or more to process paper returns meaning that those refunds are expected to be issued in seven weeks or more.  RBSK Partners offers efiling for all eligible income tax returns.

This year’s return will include new questions to incorporate provisions of the Affordable Care Act (or ACA). Taxpayers who have qualifying health insurance all year will simply need to check a box to verify they have health insurance coverage. Other taxpayers will have to provide additional details to determine if they are eligible for the premium tax credit or subject to the individual shared responsibility payment (penalty).  If you have questions regarding the new ACA, please contact RBSK.

RBSK Partners has sent tax organizers to all existing individual clients.  If you haven’t received one, or are interested in becoming a client, please contact RBSK Partners.

 

Submitted by Jean Ralston, CPA

Tax Manager, RBSK Partners PC

Jean 2013