For those working a traditional W-2 job, now that it is a new year, it is time to review and/or update your W-2 withholding at your job (or jobs).
There have been many changes in the tax code recently, with many changes going into effect for the 2019 tax year. Since everything is new, the best thing to do to figure out what you should be withholding for each job is to use the withholding tax calculator found on the IRS website: https://apps.irs.gov/app/withholdingcalculator/
What are some things that have changed?
- Personal exemptions have been eliminated.
- Standard deductions have increased.
- Marginal tax rates have been lowered.
- 401(k) maximum employee contribution has increased to $19,000.
- Can no longer deduct unreimbursed business expenses (does not apply to schedule C)
What does this mean?
If you used to itemize to say, take the medical expenses deduction, you may not incur enough medical expenses to take the deduction this year. Be sure to follow your numbers closely, as it may not be worth it to itemize.
Required to drive to different business sites in your personal car for your W-2 job? You’re no longer allowed to deduct the mileage on your tax return. This does not apply if you file a schedule C with your taxes.
With all of these changes, you should revisit the tax withholding calculator anytime there is a change in your circumstances (get a new job, switch jobs, etc.) to make sure you’re withholding appropriately.
Baby steps y’all.