It’s easy to sidestep withholding problems if you stay on top of what comes out of your paycheck and adjust it as necessary. Your goal is to claim all of the W-4 allowances you are entitled to so that your withholding will come as close as possible to your actual tax liability.

Check early, check often

You can change your withholding at any time, so check early and check often to make sure you are withholding the correct amount. When you get your first paycheck of the year, you can see what amount was taken out and multiply it by the number of pay periods to get an idea of what your final withholding will total.

Now that you have filed your taxes for last year, you’ll get a better picture of how precise your withholding calculations were. If they were on the mark, and your circumstances haven’t changed substantially, then you’re OK. But if you owed a lot or got a big refund, you need to adjust your withholding. Likewise, if you got married, divorced, had a child, your spouse stopped or started working, or you bought a house, you need to refigure the amount you had withheld.

Common reasons to adjust withholding:

  1. Got married or divorced
  2. Had a baby
  3. Bought a house
  4. Spouse stopped or started working
  5. Added second job
  6. Nonwage income (interest, dividends, inheritance, etc.)

Throughout the year, you also need to be aware of any income you get from sources where there is no withholding. This includes nonwage income, such as interest, dividends, capital gains or retirement plan distributions. If this increases dramatically, you need to increase your withholding amount or make estimated tax payments.

For more information about taxes and withholding contact one of our offices:                  Plymouth 734.454.4100,    Allen Park 313.388.7180,    Grayling 989.348.4055,                           Royal Oak 248.399.7331,    Saginaw 989.782.1985,    St. Clair Shores 313.371.6600