Tax law leave more in your paycheck? You may have to give some back
Many New Jersey workers and married couples are getting a little bit more money in their weekly paychecks because of the new tax laws signed by President Donald Trump at the end of last year.
The shift comes after the Internal Revenue Service issued revised withholding tables to employers that reflect the tax changes.
But how do you know if the amount you’re getting is really right?
The answer, according to the experts is, it’s hard to know for sure.
“The best way to do that is to handle each case on a case-by-case basis,” said Peter Greco, the chief tax researcher for the CSI group.
He said there is no set formula to know for sure if you’re getting too much or too little taken out of your paycheck.
“The only way to do that will be when people prepare their taxes. Their CPA should also compute the 2018 tax liability. Based on the liability, they should be able to say, OK, I should withhold a little bit less, a little bit more.”
Greco said before people start going on shopping sprees with the extra cash they’re getting, they need to be careful and find out what their specific situation is, especially if they’re receiving upwards of $100 a week extra in their paychecks.
Getting more in a paycheck on a weekly basis may actually backfire because it could mean no refund after filing 2018's taxes.
“Some of these people may depend on that refund at the end of the year, so since they’re getting the extra money every week they will not get that refund next year. Or with some people, they also may owe.”
He said there is no hard and fast rule for how much money should be withheld because the type and amount of allowable tax deductions has changed, and different people will be affected in different ways.
“Since a lot of people will not be able to itemize their deductions, because the standard deduction is raised to $24,000 (for a married couple), they will be paying more tax,” he said.
“But if they have several kids, the child tax credit will make up for the tax that they lose on the deductions.”
In other words, each case is unique and should be looked at separately.
You can contact reporter David Matthau at David.Matthau@townsquaremedia.com