State Withholdings- Can You Change Them?
State Withholdings- Can You Change Them?
This tax season, there’s a renewed focus on “Withholding”. Have you noticed?
The IRS, and then employers, reduced withholding schedules because of the Tax Cut and Jobs Act of 2017. Federal withholding went down. Employees got a bigger paycheck. For many taxpayers, the result is less withholding, maybe less of a tax refund or owing more in taxes.
This has put a focus on reviewing and potentially adjusting your Federal withholdings. The idea is to match the amount you pay in taxes with the amount of tax withheld. That works for Federal, but did you know you’re able to change your state withholdings, too?
First off, if you live in one of the nine states that doesn’t have state income tax, you don’t need to concern yourself with state withholdings. These states are Alaska, Florida, Nevada, New Hampshire, South Dakota, Texas, Tennessee, Washington, and Wyoming.
For the remaining states, your employer typically uses the same withholding status for state income tax withholding as they do for federal income tax which is based on your W-4. That would explain why you may not recall seeing a withholding form for your state! If the topic of state withholding is new to you, it is worth reviewing. Be sure to take a look at your state withholding any time you begin employment, change your filing status, or when there’s been an update to your personal or financial situation.
If you want to change your withholding allowances, you’ll need to find your own state’s Employee’s Withholding Allowance Certificate and complete the worksheet. You can use this form to claim an exemption from state taxes or to have additional tax withheld from your paycheck. Each state has its own tax rates, so expect that withholdings requirements and what qualifies as an exemption to be specific to each individual state.
One thing that seems standard, however, is that there is a penalty if you have not had a sufficient amount of income tax withheld. Be sure to check with your tax preparer if you have any questions.
