Checking and then adjusting tax withholding can help make sure you:
- don’t owe more tax than you are expecting;
- don’t get a surprise tax bill, and possibly a penalty, when filing next year; and
- don’t receive a refund that is much larger or smaller than expected.
It’s important to do this as early in the year as possible, so that if a tax withholding adjustment is needed, there is more time for withholding to happen evenly during the rest of the year. Waiting means there are fewer pay periods to withhold the necessary federal tax.
For 2018, the average refund was around than $2,700. As you do your new calculation, decide if you want to reduce withholding to have a larger paycheck and smaller refund and adjust accordingly. Then provide your employer with the new information on Form W-4, Employee’s Withholding Allowance Certificate. It’s that simple!
Are You Self-Employed, Work or Participate in Non-Traditional Employment or Service Industries, or Make Money Online?
If you use one of the many online platforms available to rent a spare bedroom, provide car rides or to connect and provide a number of other goods or services, you’re involved in what is sometimes called the sharing economy.
If you receive income from a sharing economy activity, it’s generally taxable even if you don’t receive a Form 1099-MISC, Miscellaneous Income, Form 1099-K, Payment Card and Third-Party Network Transactions, Form W-2, Wage and Tax Statement, or some other income statement. This is true even if you do it as a side job or just as a part-time business and even if you are paid in cash.
For those who don’t pay taxes through withholding, or pay too little tax that way, you can still use the Withholding Calculator to determine if you need to pay estimated tax to the IRS quarterly during the year. Those who are self-employed or participate in sharing economy-type transactions generally pay tax this way. See Form 1040-ES, Estimated Taxes for Individuals, for details.
For more information about non-traditional income activities, visit the Sharing Economy Tax Center.
Need a Copy of Your Tax Return?
You may be able to get a copy of your tax return or return information from other sources, if you did not keep a copy. If you had your tax return completed by a paid preparer, they should be able to provide you a copy of the return. The IRS can provide a Tax Return Transcript of your 2018 return and three prior years, free of charge. The transcript provides most of the line entries from the original tax return and usually contains the information that a third party (such as a mortgage company) requires. See How to Get Tax Transcripts and Copies of Tax Returns from the IRS for options.
Taxpayer Advocate Service Resources: