So, the IRS is sending you a big check again this year? Bet you’re excited about it! But that money could have been in your paycheck — and your bank account — all along. Instead, you’ve allowed Uncle Sam to “borrow” your money throughout the year without paying interest on the loan.
The number of allowances you claimed when you filled out your Form W-4 dictates the amount of tax your employer withholds from your paycheck. The more allowances you claim, the less tax is withheld, and vice versa.
You can change the number of withholding allowances at any time. All you have to do is fill out a new Form W-4 and give it to your employer.
Do the Math
Your goal should be to have enough money withheld so that you won’t be subject to an underpayment penalty. Your tax advisor can help you determine the ideal number of allowances to claim.
For more help with individual or business taxes, connect with us today by calling our Los Angeles CPA Firm at 818-404-1084. Our team can help you with all your tax services from tax preparation to tax planning to IRS tax help.