Tax Time Tips
Though nothing can be done for employees who are surprised by their tax returns from last year, we cannot stress enough the importance of encouraging employees to be proactive and to do a health check of their withholding periodically.
Employees should reviewing earnings and deductions in their paystub quarterly (at the very least)!
My employee has reached out questioning the amount of tax withholding. What should I say?
First, give your employees information.
Current filing status
Provide your employee with their current filing status in your payroll system. This should match their current W-4.
IRS Withholding Recommendations
Encourage the employee to visit the IRS website to check their withholding recommendation.
They can use the Tax Withholding Estimator for help identifying the correct withholding.
IRS Tax Tables
Often employees ask what the tax tables look like from the IRS. For some light reading, here are the published tables from the IRS.
It is IMPORTANT to note that this is based on TAXABLE wages, NOT gross wages, so pre-tax deductions (such as retirement and medical) are reducing the gross to be the taxable wages.
Consult their tax professional.
The employees should consult with their tax professional for recommendations.
Options for adjusting withholding:
Option 1
Add an additional withholding amount to what is currently being withheld from each paycheck.
If they feel they need MORE federal withholding coming out of their paycheck, they can always do an additional amount that will ADD to what is currently coming out (i.e. + $10, etc).
Option 2
Change their filing status.
If the employee feels that they are not using the correct filing status, have them complete an updated W-4 and submit for future withholding.