With less than two months remaining in the calendar year, it's a great time to double check your federal withholding to make sure enough taxes are being taken out of your pay.
The average refund for 2010 was just over $3,000. Although in part due to tax credits associated with the economic stimulus package, it's still an increase of nearly 10 percent from the previous year. In addition, even though the Making Work Pay Tax Credit lowered tax withholding rates in 2010 for millions of American households, some workers and retirees still need to take steps to make sure enough tax is being taken out of their checks.
Certain folks should pay particular attention to their withholding. These include:
- Married couples with two incomes
- Individuals with multiple jobs
- Some Social Security recipients who work
- Workers who do not have valid Social Security numbers
- Retirees who receive pension payments
Taxpayers who wind up owing too much tax because not enough money was withheld from their paychecks during 2011 may qualify for special relief on a penalty that sometimes applies. Depending on their personal situation, some people could have less withheld from their paychecks than they need or want.
Failure to adjust withholding could result in potentially smaller refunds or, in limited instances, a taxpayer may owe tax rather than receive a refund next year.
If you're not sure how much you need to withhold from your paycheck, just give us a call and we'll figure it out with you.