19 Jan Five Life Changes that Should Make You Revisit Your W-4 Withholding by Trisha Burke

Posted at 04:45h in Trisha Burke by GWG Admin Support 0 Comments

Some life events result in more taxes, while others entitle you to credits and deductions that lower your taxes. The list of these events is long, but here are 5 of the most common:

You get a second job
Getting a second job is the most common reason for needing to adjust your
W-4. Do this whether you moonlight, have a home business, or get another full-time job. Any time your income goes up, your tax liability will likely go up too, requiring a new W-4.
Your spouse gets a job or changes jobs
Any change of household income, whether up or down, could put joint filers in a different tax bracket and require both of you to modify your allowances.
You’re unemployed part of the year
If you get laid off from your job and stay unemployed the rest of the year, you likely had too much tax withheld. But if you get re-hired in the same year, you’ll need to adjust for the downtime.
You get married…or divorced
Married persons filing jointly qualify for a lower tax rate and other deductions. Getting a divorce will take you back to single status and reverse many tax benefits. If you fail to account for these events on your W-4 by adjusting allowances, your withholdings could be inaccurate.
You have a baby…or adopt one
A new baby is more than a bundle of joy for you and your spouse. It’s a major tax event too. You can claim an additional allowance for a dependent and may qualify for the Child Tax Credit, Child Care Tax Credit and others. If you adopt a child, there’s another tax credit. Any of these could allow you to reduce your withholding to account for the added tax benefits. Leaving your withholdings as-is will likely result in a larger than expected tax refund.

Now is the time to adjust your W-4 especially if you claimed more exemptions on the W-4 form
than you will actually claim on your 2016 Income Tax Return.

Trisha Burke
Tax Tyme