We’re in the early days of July, which means we’ve crossed the halfway point of the 2012 tax year. There’s still plenty of time to implement most tax strategies for 2012, but the clock is ticking on getting your withholding accurate!
If you were under-withheld in 2011 and didn’t adjust your withholding, you’ll likely end up under-withheld in 2012. With each paycheck that passes, the adjustment necessary to fix your withholding is getting larger. July is a good time to look at your withholding and do what’s necessary to increase it if necessary.
If you do need to adjust your withholding, you do so by submitting a new Form W-4 to your employer. The form has a worksheet to assist you in choosing the number of allowances you need to elect, but you can also use the tables in IRS Publication 15 (Circular E) to more accurately determine the amount of withholding you need.
Although not as critical, don’t forget to address state withholding as well!