Why You Need to Adjust Your W4 Withholding

There are many reasons that you might need to change your W4 withholding and even though there are many, we are going to take a look at some of the more common ones here. tax deduction

  • New Baby:

    Having a new baby enables you to claim an additional allowance on your taxes and allow you to qualify for the Child Tax Credit, Child Care Tax Credit or other credits that could effectively reduce you withholding allowances.  Not changing your withholdings after having a new child will more than likely result in a larger tax refund.

  • Unemployment:

    If you are unemployed for a portion of the year, you may have had too much tax withheld and need to adjust for the downtime. This is where you will want to increase the number of allowances you claim to avoid paying too much tax.

  • Second Income:

    This is the most common reason to adjust your W-4 form. When your income goes up as it would from a second job, your tax liability will go us also. Even if your second income doesn’t offer a W-4 of its own, you can still make the necessary changes on your main job’s W-4.

  • Spouse Changes Jobs:

    If your spouse changes jobs, it equals a change in household income and can put you in a higher tax bracket if you file jointly. This difference will mean that you both must change your W-4 allowances accordingly. Using your combined income will ensure accuracy when filing and making any changes. Something to remember is that one spouse can claim all of them or they can be divided between both W-4s.

  • You Get Married or Divorced:

    If both spouses work, getting married or divorced will mean a change in your tax rate. If you are married and filing jointly, you can qualify for a lower tax rate and other favorable deductions. When you get a divorce, many of these tax benefits will be reversed and you will need to account for this by adjusting your allowances bringing your withholding’s back where they should be for someone in a single status.

Making the necessary changes in your W-4 withholding will ensure that you get the most refund you have coming to you and will save you money year after year on your taxes. If you need to make any changes to your W-4 forms, do it as soon as possible to keep your filing status accurate and up-to-date.

Elizabeth Roberts

Elizabeth Roberts

Liz Roberts and her team are continuously providing information to people who are ready to repair their credit and improve their credit score. Also NewHorizon.org team strives to empower the homebased and small business owners by bringing information that can help them to manage and grow their businesses. Let our 24+ years of business finance experience help you to get the financing you need! CONTACT US if need financing for your business.

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NewHorizon.org is an independent, advertising supported website. The owner of the site may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on links posted on this website. NewHorizon.org has not reviewed all available credit card offers in the marketplace.

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