With the most recent Tax Cuts and Jobs Act of 2017, some of us are going to see some significant changes to our paychecks. Specifically when dealing with withholdings, the amount that’s being set aside is going to change dramatically. That’s why the IRS is recommending you get a ‘Paycheck Checkup’.
A Paycheck Checkup is a way of seeing how much should be taken out of your paycheck per your personal situations. This ensures that you’re not only setting aside the proper amount of withholdings but aren’t having an unnecessarily high amount of taxes taken out. And although most of us have our employer handle this, the IRS’s recommendation comes for a few reasons:
- Not every employer is going to be mindful of these new practices.
- Some employers might neglect or set aside updating their policies due to laziness.
- There are employers that might try to take advantage of these new laws by committing wage fraud, a particularly significant problem for hourly and wage workers (more on this later).
Who Does This Benefit?
Although conducting a Paycheck Checkup is a decent idea for most of us, the IRS specifically outlines a few candidates:
- Two-income families
- People working two or more jobs or who only work for part of the year
- People with children who claim credits such as the Child Tax Credit
- People with older dependents, including children age 17 or older
- People who itemized deductions in 2017
- People with high incomes and more complex tax returns
- People with large tax refunds or large tax bills for 2017
Additionally, those who conduct taxes quarterly as an independent contractor might also want to double check, especially considering quarterlies are due on April 17th.
As noted above, a significant factor to having a Paycheck Checkup conducted is that it prevents against wage theft. According to a study by The Economic Policy Institute, a staggering $8 billion was lost to wage theft in the 10 most populated states alone, primarily from low-income workers.
Basically, this is when an employer steals from their agreed upon wages, including but not counting overtime, purposely producing incorrect pay stubs, or even illegal deductions. Make no mistake, wage theft is abundant, and as many of us are recently catching up on these changes, now’s a prime opportunity for theft. However, that’s why getting a Paycheck Checkup done sooner rather than later is vital.
How You Can Get A Paycheck Checkup
If you’re considering getting a Paycheck Checkup done, then there are a few options for you to consider. The first is going through the IRS’s calculator, which you can find here. While it’s relatively intuitive, the process can be somewhat confusing and time-consuming, especially if you haven’t had to deal much with tax law. However, we here at People’s Tax are also willing to conduct a Paycheck Checkup, where our team of experts can help decipher if any adjustments should be made or considered.
With taxes due in a week, no one wants to be left taken advantage of or unnecessarily paying more than they have to. Feel free to drop us a line if you’d like to have a Paycheck Check Up done so you can feel at ease about your tax situation.