Making a decision about how many deductions to take from your paycheck is often unclear. The changes in the tax law for 2018 make this a vital issue for all. If you withhold too much, you may receive a tax rebate; yet withhold too little and you may owe the IRS at tax time. Check with the IRS Withholding Calculator and make sure you’re on track:
IRS 2018 Withholding Calculator
We have seven months under our belts this year on Tuesday! This is a great time to take a look and make necessary changes before the last quarter of the year. Smart Asset provides a calculator – plug in your state of residence and particulars to see how you’re doing. Smart Asset_Taxes_Paycheck Calculator
While we’re thinking of taxes and deductions – what about deferred compensation limits for this year? When we make a contribution to a 401K plan, the theory of these plans is that you (in my layperson terms) “defer some of your salary today to have for tomorrow”. You are not taxed on the dollars you “defer for tomorrow” until you withdraw those funds. There are two things to note: 1. there are limits provided each year by the IRS of contribution amounts and 2. taxes are not applied until you withdraw the funds contributed, you are in fact showing less “earned income” for tax purposes on this year’s paycheck.
Have a look at the 2018 limits on the IRS website to see how you’re doing. IRS Defined Contribution Limits 2018
Enough about business today – it’s summer! Enjoy some time to recharge your battery, refresh your mind and take in the amazing produce of the season!
Ella Fitzgerald was a staple in my house growing up. Her classic, “Summertime” comes to mind as I greet the day. The refrain is:
“Summertime, and the livin’ is easy
Fish are jumpin’ and the cotton is high
Oh, your daddy’s rich and your ma is good-lookin’
So hush, little baby, don’t you cry …”
Helping you see the world through the eyes of what’s possible and prudent is what I love to do. When you’re ready, contact us to learn more about how we work with individuals, business owners and employees via Email or online @ The Living Planner #AreYouReady #CareForPeopleCareForBusiness