Now that the 2018 tax season is over, filed and paid, you will want to start planning your 2019 taxes for next year’s return. As most people know, the IRS has made many changes to the tax law, and you saw the difference this year. With the many changes each year, it is wise to meet with a local trusted business and tax advisor to discuss your 2019 taxes and make adjustments now, so you maximize your return. Typically, you can schedule a complimentary consultation.
An important deduction to review now is your tax employee’s withholding allowance certificate.
Tax employee’s withholding allowance
The tax employee’s withholding allowance is an exemption that reduces how much income tax an employer deducts from an employee’s paycheck. You either pay now (higher allowances) or pay later (2019 tax return). The more allowances you claim, the less income tax that will be withheld from your paycheck. The fewer allowances that you claim, the more tax will be withheld from your paycheck.
An income tax, or a retention tax, is an income tax to be paid to the government by the payer of the income rather than by the recipient of the income. The tax is therefore withheld or subtracted from the financial gain because of the recipient.
The W-4 is a form used by your employer to withhold the proper amount of income tax from your paychecks. Generally, the additional allowances you claim, the less tax will be withheld from each paycheck. The fewer allowances claimed, the larger withholding amount, which can possibly end in a refund.
Employee’s withholding allowance certificate
Your employer gives you this form at the beginning of your employment or lets you revisit it again at the beginning of each year to make changes with your payroll. The IRS form has a worksheet section to complete to determine the correct amount of allowance(s) to select. Because it doesn’t include other factors that determine your taxes, it would be a good move to meet with your local CPA that is a business and tax advisor as well.
How many allowances should I claim?
Claiming 0 withholding allowances on your W-4 means that your employer that will withhold the maximum amount of income taxes from your paychecks. It doesn’t mean that you will pay more taxes. The allowances affect how much is withheld from your paychecks. The more allowances that you claim will reduce the amount withheld from your paychecks.
Single with no dependents
I’m single, have a job and have no dependents to claim. The easy answer is that you should claim either one or two allowances. With one allowance, you will probably get a refund. If you claim two allowances, this will get you closer to paying your exact tax liability. This answer is given in a vacuum not knowing any other items about you, your finances, and tax strategies that might come into play. That is why it is so important to meet with your local CPA that is a business and tax advisor to get specific advice for you that has your other factors involved in the decision.
Here are some common questions with answers about filing your taxes.
With the changing laws and complex compliance issues, it is extremely important to have a CPA that you can trust and ask about issues as they come up. It is highly recommended that you file your taxes with experienced help.
Joshua Wilson, CPA, PC is a full-service public accounting firm that specializes in accounting, tax preparation, tax planning, & business development for small businesses in Winder, GA, and the surrounding areas. Give Joshua a call today to set up a consultation at 770-856-1309 or email him at firstname.lastname@example.org.