Did you fill out that W-4 form right? Will you have enough withholding, owe at tax time, or will you get a huge refund? A huge refund in’t necessarily a bad thing but it is an interest free loan to Uncle Sam.
What is a Withholding?
You get paid, Uncle Sam takes his cut, that is what withholding is. Either you pay as you go or you owe a lot at tax time and if you don’t pay as you go then you may owe penalties on top of those taxes!
Have your current pay-stub handy, and your recent tax return, if you don’t have this info and want to estimate it just know that the results are only as accurate as the data entered (remember garbage in = garbage out).
Here is the website for the calculator on withholding. If the results scare you then you can easily change your withholding by printing a new Form W-4 and submit it to your employer. Some companies have websites that allow a user to log-into and update the withholding with a click of the mouse.
If you don’t know how to fill it out then you are in the right place because here we go:
The personal allowances worksheet gives you an idea of how many allowances you should be claiming. Most people write zero in items A though H to offset any taxes and get a large refund.
If you are married, both spouses work and have kids the calculation can become more complex.