Will Filing Your Taxes Surprise You?

With the Job Creation and Tax Cuts aka new tax plan of 2018, income tax exemptions were eliminated. That’s right, eliminated. To make up for this, the standard deduction is almost doubled and the child tax credit is doubled. But… you may still be in for a big surprise come time to file and pay your taxes this April. Surprises can be good (if you get a tax refund) or bad (when you owe more money).  The exemption was based on the number of your household members for tax purposes and your tax status. For a family of 5 comprising of two spouses and three dependent children, this was worth just over $20,000. This was the information you put on your W4 and used to calculate tax withholding every pay period. 

While you have your latest pay stub in hand, go to the IRS website and check your withholding. It won’t change any amounts you owe for 2018, so you may still be in for a surprise, but it will put you on track for your 2019 return so the earlier in the year you do this, the better.

This calculator is a few pages, it does not link to any of your personal IRS information, doesn’t ask for personal information like name; it just wants the financial facts. 

Make sure you fill out a new W4 for payroll based on if you have withheld too much or will get a large refund. https://www.irs.gov/pub/irs-pdf/fw4.pdf

The new W4 looks very different from previous years and at a first glance looks a lot like a tax return. Be not intimidated, work your way through the two-page document and then send it off to your payroll department. Sometimes the best surprise is no surprise at all!