Federal Income Tax Withholding Too Low This Year?
September 22, 2009
Federal income tax withholding tables were adjusted earlier in 2009 due to the “Making Work Pay” tax credit as part of the economic stimulus package. The reduction of federal income tax withholding was intended to provide a gradual financial benefit to the economy by putting a little more money in your paycheck each month.
Federal Income Tax Credit Impact
Many employers and payroll companies automatically handled the change in tables so many workers didn’t have to fill out any paperwork to take advantage of the tax credit. Of course, based on your financial situation, this change could potentially result in withholding less than your personal income tax liability.
As we approach the final quarter of the year it would be smart to check your tax withholding levels. The following groups of people should pay close attention:
- Married couples with two incomes
- Individuals with multiple jobs
- Workers who can be claimed as dependents by other taxpayers
Federal Income Tax Withholding Calculator
You can check out the IRS Withholding Calculator to make sure you’re withholding enough from your paycheck for 2009. The IRS Publication 919 (How Do I Adjust My Tax Withholding) is another good resource for income tax withholding.
Remember, although your payroll department may have adjusted your withholding automatically they don’t know your personal finance situation. This means it’s up to you to submit a Federal W-4 if you need to change your amount of withholding.
All posts by Ben Edwards