Buzz
If you typically receive a large tax refund, it may be time to reconsider your withholding. The IRS has warned that refunds for 2016 taxes might be delayed, urging taxpayers to make adjustments.
We’ve previously mentioned that a tax refund isn’t as great as it seems—it often means you're paying too much in taxes over the course of the year. Now, the IRS has issued a warning: the refund you expect in 2017 might take longer, so you should consider adjusting your withholding now to avoid overpaying throughout the year.
Tax professionals suggest making this change regardless. Ideally, you want your tax payments throughout the year to match what you actually owe. While this means you won’t receive a large refund in April, it also ensures larger paychecks throughout the year.
To adjust your withholding, update the W4 form your employer holds on file. If you usually receive a large refund, you’ll want to increase the number of allowances on your W4. We’ve explained how to do this in greater detail here.
So, what’s causing the IRS delay?
The IRS states that a new law mandates holding refunds for a few weeks for certain early filers in 2017 claiming the Earned Income Tax Credit and the Additional Child Tax Credit. Additionally, they mention that efforts to combat identity theft are being strengthened, which could result in some tax returns undergoing extra review time.
“Given these changes, it makes perfect sense on several levels to review your withholding and plan ahead for next tax season,” stated IRS Commissioner John Koskinen. “It’s up to you whether you want to have more money withheld for a larger refund, but you do have options if you'd prefer a smaller refund next year and a higher paycheck now.”
If you're accustomed to receiving a large refund, you may want to add this task to your list before April. For more information, visit their release at the link provided below.
IRS Urges Taxpayers to Review Their Withholding; New Factors Make Mid-Year Checkups Even More Critical IRS.gov
Image courtesy of Pictures of Money.
