Paycheck Withholding

No one likes to learn their tax return resulted in additional taxes. It is an unexpected bill when you were planning for a refund.  Changes in tax laws have resulted in changes to withholding tables. The tables use assumptions that might not match with your actually income. 
Individuals with multiple jobs and students are most likely to have insufficient withholding to cover their tax liability.  When several W-2 forms are reported on the tax return, the resulting total income that was taxed at 10% now falls into a higher tax bracket. 
The IRS suggests that a target refund amount should be $25.  The average federal refund from 2018 returns has been $1,949.  Most of us could do a better job filling out our W-4 and receiving more paycheck during the year.  The IRS provides a withholding calculator that will use your income and filing information to recommend a target amount. Iowa income tax withholding can be checked by using the Department of Revenue calculator. Compare the amount to current withholding and make adjustments.  Use the calculators when income or family circumstances change.  If you have multiple jobs, be sure to claim yourself only once at one worksite.  Full-time students should typically claim 0, because they will be claimed as dependents on their parent’s tax return until age 24.
W-4 forms can be updated at any time with your employer. Check your paystub to verify the adjustments were properly completed.  If you are self-employed, check with your tax accountant for an estimate of how much income to set aside for next year’s income and social security taxes.

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