Financial Advice for Two Income Families

The IRS has recently advised two income families to make sure they are withholding the correct amount of taxes from their checks each month.   

One reason it is so important to do this now is because of the passage of the Tax Cuts and Jobs Act, which is going to affect 2018’s tax returns . The act will change many things about taxes, including:

l  The standard deduction, which will be increased

l  Tax rates and tax brackets

l  Personal exemptions, which will be eliminated

l  The child tax credit, which will be increase

l  Certain deductions, which will be limited or discontinued

Because of all of these changes and because of the complex nature of taxes for two income families, people who fall into this category are a lot more likely to have too much or not enough withheld from their paychecks, especially after all of these changes to tax law.

For this reason, it is very smart to check over your paycheck set-up and make sure you are withholding the right amount. If you do need to adjust it, the sooner you do it, the better. That way, it is more likely you can get your withholding balanced out or at least mostly balanced out before tax time.

If you’re not sure whether you’re withholding the right amount, use the IRS’s withholding calculator, talk to the human resources department at your job, or visit with a tax professional.

And, to put the change in action, complete a new W-4 and submit it to your employer. Bear in mind, when you do, that the fewer withholding allowances you have on this form, the higher your withholding.

And, if you find all of this confusing or need help ensuring you’re doing everything right, do not underestimate the help and expertise that a tax professional can bring to the table.