How to Right Size Next Year's Tax Return

Tax Planning

How to Right Size Next Year’s Tax Return

Adjust your W-4 form to avoid an unpleasant surprise when you file your 2019 return.

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The 2018 tax season is over, and a lot of taxpayers are not happy. Thanks to the tax overhaul, some got smaller refunds than they received in the past, and others were hit with an unexpected tax bill. The reason: In 2018, the IRS adjusted the tables employers use to withhold taxes from workers’ paychecks. Many people had less taken out but didn’t notice the modest increase in their pay.

See Also: IRS Waives Penalties for Many Taxpayers Surprised by Under-Withholding

If you’d like to have more (or less) withheld in 2019, here’s what you need to do:

Step 1: Gather your documents.

You’ll need your most recent pay stubs and your 2018 income tax return.


Step 2: Estimate your 2019 tax liability.

Go to the IRS Withholding Calculator. You’ll be asked about your 2019 filing status, such as single or married. Then you’ll be prompted to fill in information about tax credits, your expected income for the year and contributions to tax-deferred retirement accounts, such as a 401(k). The calculator will estimate your tax liability and how much will likely be withheld in taxes.

Step 3: Adjust withholding.

If the amount withheld from your paychecks is more than your tax liability, you will get a refund when you file your 2019 return. If the opposite is true, you’ll get a tax bill. The withholding calculator will suggest how to adjust your allowances to change the result. Each allowance is worth $4,200 for tax year 2019; the more allowances you claim, the less money will be withheld.

Step 4: Fill out a new W-4.

Print out a W-4 form, and write in the number of allowances you want to claim on line 5. If you have side income or other circumstances that could trigger a big tax bill, you may want to have additional money withheld. Go to line 6 and write in the dollar amount you want taken out of each paycheck.