Quick Tax Tip: Look at Your Paystubs

Every year, there is inevitably one client whose return we prepare, who filled out the W-4 for their W-2 incorrectly, thus leaving them unintentionally under withheld. This actually happened several years ago with a family member - they marked “exempt” on their W-4 because they thought the phrasing of the question meant they didn’t pay any taxes when the filed their return, not that they aren’t legally obligated to not pay taxes. As a result, they had $0 withheld in federal income tax and a fat tax bill due.

For one client we offered to review their paystubs to look at what was being pulled out each month because they said it feels like they "never have any money", and lo and behold, over $1,000 was coming out in health insurance premiums per month when they thought their costs were only $125/mo.

Please take time to look at and review each paystub for inconsistencies; despite the best efforts of accountants and employers, mistakes happen frequently and unless you as the employee catch it, no one will.