Bigger tax refund, is it possible?
Was your refund lower than you had expected for 2018? You’re not alone; in 2018, the withholding tables changed – giving you a little bit more money each paycheck rather than at the end of the year through your tax refund.
IRS forms are arguably one of the most headache-prone pieces of paper out there! But if you want to increase your tax refund for 2019, there is a change you can make to your W-4 now that will accomplish that next year. So many things can happen throughout the year that can affect your refund next year. Want a quick trick to estimate your 2019 refund? Get a calculator ready.
Essentially, you want to figure out the number of paychecks you have left in the year and then divide that into how much you owed on your 2018 taxes. If you owed $2,000 for your 2018 federal taxes, you might decide to have an extra $200 withheld each paycheck beginning in August if you’re paid twice a month. $2,000 divided by 10 paychecks left in 2019 equals $200 of additional withholding you would need to not owe on your 2019 tax return, assuming all else is equal!
On Line 6 of the current W-4, you can instruct your employer to withhold that additional amount each paycheck to cover that amount while you have time left in 2019. While this alone may not be a 100% accurate reflection of your refund next year, it can give you a good idea of what would help you for the time being.
Taxes Can Be Tricky
Something to keep in mind is that your tax situation can drastically change if you have had certain life events in 2019, like having a baby, buying or selling a home, getting married, getting divorced, etc.
To better understand how life events can affect your tax return, CPA Nerds are here to help. Give us a call to set up a Mid-Year Checkup on your tax situation, and we will guide you along the necessary steps to put you in the tax situation you WANT to be in!