Why is my tax refund smaller than before?

You’ve noticed your tax refund looking bleak lately?

Unfortunately, your eyes are not deceiving you.

Your tax refund is a direct reflection of how much or how little your employer is withholding your taxes on each pay period. If they take too much out, you may receive a refund. Too little? You will have to owe the government that extra money.

Why is this happening? In 2019, the IRS announced a change to the W4 form that would take place in 2020. The W4 form is formally known as the Employee Withholding Certificate, and it used to be based on your designated exemptions. Don’t you remember claiming a “1” for yourself and so on for each dependent? Well, that is no longer the case.

The newly revised W4 form attempts to take out exactly what you owe for your federal taxes based on certain criteria.

You should pay attention and possibly update your W4 form if any of the following life events change:

• You obtain a second job. You should do this if you have a home business, obtain a second job for a different employer or even moonlight (working sporadically on a contract basis).
• Your spouse starts to work or changes jobs. Any changes to your household income should be reported on your W4 form.
• You are unemployed for a portion of the year. Unemployment can affect your tax withholding, and you may need to adjust when you obtain employment.
• Bringing a new child home. Whether it’s having a child or adopting one, this can have a major effect on your federal tax withholding, and you will likely need to make an adjustment to your W4 form.
• Change in marital status. If you get married or divorced, you need to change this information on your W4 form pronto! Married couples who file jointly have different tax benefits than those who are single.

If your refund isn’t what you expected, don’t leave money on the table! Let us help you maximize your deductions and keep more of what you earn. Book a consultation today and make sure you’re getting every dollar you deserve! Call, text or email today!