Blog | “Why You Should Have A Withholding Review Now"

Why You Need a
Withholding Review Now

With tax season in the rear-view mirror, now is the time to take a hard look at your federal and/or state withholdings to ensure next year's tax bill does not surprise you.
Below, we will review a number of new tax code changes that will impact the amount of tax you pay next year. So much so, that if you do not forecast your tax obligation now, you may be in for a very unpleasant surprise.

No More Advance Payments for the Child Tax Credit The one year requirement of the IRS to pay out half of the Child Tax Credit in advance is no longer in place. So, you will not only need to plan for this change, it will also impact your tax return.
Child Tax Credits Are Lower In addition, the Child Tax Credit amount for each child is rolling back to the 2020 dollar amount of $2,000. This could mean as much as $1,600 in lower credits for each of your children.
Dependent Care Credits are Lower The dependent care credit is also lower in 2022. So if both you and your spouse work and have daycare expenses, you will need to forecast the impact of this on this year's tax obligation.
New 1099-K Reporting May Require Estimated Tax Payments The IRS will be receiving millions of new information tax forms reporting activity from those using digital payment platforms. We have a handy article all about it here. So, for those reselling event tickets, using sites like Ebay, and Amazon, you will now need to account for all this income. It may now require quarterly estimated tax payments throughout the year.
Be aware of life events In addition, a change in your situation could create the need to review your withholdings. It could be due to a job change, selling or buying a home, getting married or divorced, or having a birth or death in the family. Whatever the cause, be aware of the potential change and put a sharp pencil to revising your withholdings.
High inflation is impacting everything Finally, consider the impact of inflation on your situation. This is especially important if you have a small business as higher costs of labor and supplies could dramatically impact your pending tax bill.

Calculating and Making Adjustments

Using the IRS Calculator The IRS has an online tool to help you calculate how much you will need to withhold. In order to get an accurate reading, you need to have a copy of your latest paycheck or last quarterly estimated tax filing (Form 1040 ES) and a copy of your last tax return.

Let Professionals Assist The IRS recently changed the way it calculates recommended withholdings. While it is well intended, many are confused by the change. It is always a good idea to consult with your accountant and review your withholdings if you have any doubts. Making adjustments now means there is time left in the year to build the proper withholding amount.

File a New Withholding Form with Your Employer Whether you're paying too much or too little, you can fix it by filling out a new W-4 form and giving it to your employer. If you're filing quarterly estimated taxes, you can adjust your next quarter's estimate in a similar way.

Now Is the Time!

We recommend doing this review halfway through the year to avoid any surprises come April 15th. If you are interested in reviewing your current withholdings with one of Gold Standard's seasoned tax accountants, click here.

Why You Need a Withholding Review Now

Calculating and Making Adjustments

Now Is the Time!

We recommend doing this review halfway through the year to avoid any surprises come April 15th. If you are interested in reviewing your current withholdings with one of Gold Standard's seasoned tax accountants, click here.

Back to Blog Post Page

Why You Need a
Withholding Review Now