Retirement Daily’s Robert Powell caught up with Jeffrey Levine, CPA and tax pro from Buckingham Strategic Wealth Partners, to discuss when and how to adjust your tax withholding.
Watch the video above, or read the transcript below.
Tax Tips for Adjusting Tax WithholdingYou should adjust your tax withholding any time there’s a significant change in your income or your life that would impact your taxesIf you are withholding taxes from an employer’s paycheck, then you want to go to your employer and find out what their procedures areIf you are withholding from retirement accounts, then you could update your withholding preferences with your institution by filling out a new form.TurboTax Live experts look out for you. Get expert help your way: get help as you go, or hand your taxes off. You can talk live to tax experts online for unlimited answers and advice OR, have a dedicated tax expert do your taxes for you, so you can be confident in your tax return. Enjoy up to an additional $20 off when you get started with TurboTax Live.
Recommended Read: Top 5 Reasons to Adjust Your Withholding
Quotes| When and How Should You Adjust Your Tax Withholding? Jeffrey Levine, Chief Planning Officer, Buckingham Strategic Wealth Jeffrey Levine, Chief Planning Officer, Buckingham Strategic WealthRecommended Read: FICA and Withholding: Everything You Need to Know
Video Transcript| Jeffrey Levine, CPA and Tax Expert, Buckingham Strategic WealthRobert Powell: When and how should you adjust your tax withholding? Well, here to talk with me about that is Jeffrey Levine from Buckingham Strategic Wealth. Jeffrey, welcome.
Jeffrey Levine: It’s good to be with you, Bob.
Robert Powell: Good to have you and be good to have you explain when and how.
Jeffrey Levine: So I think let’s start with the when. The when you should adjust your tax withholding is any time there’s a significant change in your income or your life that would impact your taxes. Now, beyond that, if you have filed your taxes for last year and you’re now reviewing your return, and you see that either you got a really big refund and you’d like to change that because you don’t feel like giving the government a tax-free loan for the entire year. Or maybe you owed a lot of money and you don’t feel like having a big tax bill come next year. Those are also times in which you may want to review your withholdings.
Now, how do you actually change it? Well, it depends upon where you’re withholding taxes from. If you’re withholding taxes, let’s say, from an employer’s paycheck, well then you want to go to the employer and find out what their procedures are. If you’re not sure, reach out to your HR department and see. They probably have some sort of portal or system that you can use to adjust your withholdings and complete a new federal withholding form to adjust those withholding dollars.
The other thing you could consider is if you are withholding, let’s say, from retirement accounts. Maybe you are a retiree. You could simply update your withholding preferences with the institution by filling out a new form with the institution. So ultimately, how you go about this is simply reaching out to the place where your dollars are withheld and asking them for what their policies and procedures are for making those updates.
Robert Powell: So if memory serves, the IRS has on its website a calculator that can help folks also determine whether to increase or decrease their withholding.
Jeffrey Levine: Well, maybe. I mean, the IRS does have a withholding calculator on its website. I’m not sure how helpful candidly it is in helping people arrive at the appropriate withholding amount. The IRS does a lot of things really well. This is just one of those things that it’s complicated, and I find most people are not using that calculator correctly. So this is a great time to reach out to a tax or a financial professional to help an individual refine those selections so that they fit their goals.
Editor’s Note: The content was reviewed for tax accuracy by a TurboTax CPA expert.
TheStreet’s Zach Faulds contributed to the writing of this article and produced the video and/or the graphics associated with it.