subject: Federal Withholding - Check What Comes Out of Your Paycheck Now Before it is Too Late [print this page] Federal Withholding - Check What Comes Out of Your Paycheck Now Before it is Too Late
Effective April 2009, the new withholding tables set forth under the ARRA may reduce the amount of federal income tax withheld from your paycheck. The tax cut, also known as the Making Work Pay, will provide an extra $13 or so in most individual paychecks each pay - which will add up to about $400 for individuals, $800 for couples filing jointly, by the end of the year. Do not worry, you should not be penalized when you file your 2009 tax return - the tables have changed so that you are allowed to take home and keep that extra money.
It is important to note, however, that the extra money in your paycheck is for one job only. If you work multiple jobs or your spouse does, be sure to review your withholding allowances. Somewhere on the stub of your paycheck should be your current federal income tax withholding allowance (for example, S/1 to denote Single, 1 allowance). If you cannot find it or if it is not on the stub, talk to your employer and request a copy of the W-4 you submitted (you should always keep a record the forms you submit, just in case your employer is lax or if there is a discrepancy between the records of your employer and your own). The Form W-4 is the form you use to fill out your federal income tax withholding allowances. You submit this form to your employer who uses it to calculate the amount of tax you owe with each paycheck. You can use the worksheet on the Form W-4 or you can go online to the IRS website and use their free calculator. Copies of the W-4 are also available on the IRS website. Talk to your accountant or your tax advisor too - after all, that is why they are there! Take the time now to review how much is being withheld from your paycheck towards your income tax. You can submit a new W-4 to change the withholding amount, so you pay a little more now, rather than owe more than you can afford next April.
Kathryn Cuff works for Radcliffe Payroll Services, a national payroll company that combines years of professional payroll expertise with personal client care. Visit us at http://www.radcliffepayroll.net/
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