Learn how to make the most of your salary, benefits, and tax deductions at your new job.
The number of withholding allowances you enter on your W-4 might affect your refund or how much you’ll owe the government every year.
To get an idea of how much you should withhold, figure your withholding amount with the H&R Block Calculator at www.hrblock.com/get-answers/tax-calculators.html.
Working two jobs
People who work two jobs often don’t have enough tax withheld from their part-time earnings. So, they might wind up owing a large sum of money at tax time. To avoid this, you might need to increase the amount of money withheld either from your main paycheck or from your second job — or both.
To change your withholding, ask your employer for a new Form W-4. You can also download and print a W-4 at www.irs.gov/formspubs. Give the completed form to your employer to change your withholding.
You should consider contributing as much as possible to your 401(k) or other company retirement plan. Many companies will match your contributions with a certain amount. Ex: For every dollar you contribute, your company might contribute 50 cents.
Your employer usually takes retirement contributions out of your paycheck, so you won’t miss the money. You’ll usually make these contributions with pre-tax dollars. So, you’ll defer tax on this portion of your earnings.
Other fringe benefits
Take advantage of other pre-tax benefits your employer provides. One common benefit is a Section 125 plan, referred to as a flexible spending account or cafeteria plan. A flexible spending account allows you to pay for medical and childcare expenses using pre-tax dollars. A health savings account (HSA) allows you to pay for medical expenses using pre-tax dollars. Using these plans might result in significant tax savings.
Also, see these tax tips:
- W-4 Withholding
- Health Savings Accounts (HSAs) and Flexible Spending Arrangements (FSAs)
- Your Paycheck
If your income is too high, you can’t contribute to a Roth IRA directly. Learn from H&R Block’s experts how you can still invest by creating a back door Roth IRA.
Does your job pay cash without withholding taxes? Learn how to pay income tax with cash wages at H&R Block.
Learn more about section 1202 gains from small business stocks and get tax answers at H&R Block.
What are at-risk limits, and how can they help you reduce your reported income? Learn more about at-risk rules and get tax answers at H&R Block.