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Here’s What You Need to Do if You Love Getting a Huge Tax Refund Each Year
If you’ve gotten used to a hefty tax return rolling in each year, you could be in for a surprise when you file next year.
That’s because the government is likely taking a bit less out of your paycheck than it has in the past. You probably noticed a slight pay bump back in February that came after Congress passed a massive Republican tax reform bill.
While a few extra dollars every two weeks might feel good, if you don’t think it’s worth shrinking your tax return — or worse, getting a tax bill instead — there’s something you can do.
The IRS created a withholding calculator to help you determine if the government is taking enough out of your pay to cover the taxes you’ll owe by next April. Make sure you have your most recent pay stub handy to fill it out.
The calculator will ask about your filing status, dependents and expected tax credits and income.
Once you complete the five-page form, you will get back three numbers:
- How much you’ll owe in income taxes.
- How much you will actually pay in taxes throughout the year.
- How much your return or your tax bill will be.
The IRS will also provide recommendations for how you can update your W-4 form to make sure you’re withholding enough to cover your tax bill and still get paid as much as possible. It will also tell you what your estimated income tax refund will be if you make the changes.
If you have your most recent pay stub handy, the calculator should take about 10 minutes to give you back the estimates and recommend the changes.
Desiree Stennett (@desi_stennett) is a staff writer at The Penny Hoarder. She writes about how government and court actions impact your wallet.