Managing Your W4 Impacts Taxes
Have you checked your W4 lately?
Solomon said, “Be sure you know the condition of your flocks, give careful attention to your herds…” (Proverbs 27:23) A little research can impact your income. Studying and updating your W4 could be a very beneficial use of time. The earlier in the year you do it, the greater the impact on your taxes. Starting in 2020, income tax withholding is generally based on your expected filing status and standard deductions for the year. You can choose to have itemized deductions, the Child Tax Credit, and other tax benefits reflected in your withholding for the year.
Changes in income can cause over or underpayment of dollars withheld. The goal is to adjust the withholding and estimated payments to get as close to a zero-tax refund as possible. This allows you to manage that money throughout the year. There is a new and improved Tax Withholding Estimator designed to help workers target the refund they want. It is available at IRS.gov. If you discover your current withholding is different from what the calculator states, then tell your employer and make the update. Employees can choose to have an employer withhold additional amounts each pay period to cover income they received elsewhere. Adjusting your W-4 is one step towards stewarding well this year.
If you are counting on a tax refund to pay off your credit card debt, get in touch with Christian Credit Counselors by calling the Crown Helpline at 800-722-1976, or visit us online at crown.org/ccc.