As tax season heats up, we get a lot of calls about deductions, updating information and making sense of tax forms. To make things easier, we’re breaking down these forms and sharing links to help ensure you encounter less surprises at tax time.
Understanding your W-4
While we saved the juicy details for this W-4 FAQ, here’s the high-level info you should know.
- The Form W-4 essentially tells your employer how much to withhold from each paycheck.
- Information like employee filing status (married, single, etc.), credits, income, and deductions are captured here and used by your employer to calculate the amount of federal income tax to deduct.
- While you filled one out when you started your current job, there is no limit to the amount of times you can update your W-4 to reflect current personal and financial circumstances. (More on that below.) The more accurate the information your employer is using, the less surprises you’ll see during tax time.
Check your withholdings
Doing what the IRS calls a “paycheck checkup” and reviewing your W-4 withholdings is good financial practice. Why?
- It prevents you from being surprised at tax time with a bill because too little tax was withheld.
- If you prefer less taxes withheld upfront, you may receive more in your paychecks and a smaller refund at tax time.
If you’ve changed your withholdings for the year, or for a major life change like marriage, birth of a child or buying a home, check them ahead of tax season. Here’s how:
- First, grab a copy of a recent pay stub. Do this by logging in to My TotalSource®, then Myself > Pay > Pay / W2 Statements.
- Next, plug that information into the IRS’s tax withholding estimator.
- View and makes updates to current withholdings (Myself > Pay > Tax Withholding) in your portal.
- Those claiming exempt that wish to make updates must check the box next to “I am claiming exempt”, then click the W4 form link to download. Once filled out, send to MyLifeAdvisor@adp.com for processing.
Understanding your W-2
Forbes published a great W-2 overview a few years ago on this important earnings summary form you see once a year. Here’s the rundown.
- While your W-4 is used by your employer to determine how much tax should be withheld from each paycheck, at the end of each year, they file your W-2 to indicate the amount that was withheld.
- The link above has the breakdown on what each box means. You’ll see taxes withheld for the year (Social Security, Medicare, income taxes), wages, benefits and other information.
- You’ll receive a W-2 if your employer pays you at least $600 in compensation for the year, or if your employer withheld income, Social Security or Medicare tax from your paycheck — even if they paid you less than $600 during the tax year.
- Your W-2 should arrive no later than January 31.
Change your address and personal information
It may not seem like a big deal that your current address doesn’t match what’s on your W-2, but this form shows your Social Security Number, which is like a master key for hackers. And, your employer will likely mail a copy to your address on file, if you didn’t elect to only receive electronically.
Basically, the only person that should get your mail is you. If the address in last year’s W-2 doesn’t reflect where you are now, take a moment to update your personal info. It’s easy and will save you sleepless nights about identity theft.
Log in to My TotalSource, then Myself > My Information > Personal Profile to change your address.