Q&A: Why was my refund much lower this year?

Did you notice 🤔 an increase in your take-home pay a few years ago?

Here's what happened:

In 2020, a new W-4 form was introduced. Its goal was to ensure that when filled out accurately, it aimed to get you as close to a $0 refund as possible, keeping more of your money with you throughout the year instead of with the IRS.

Your withholdings were likely adjusted to align with this new form, meaning the money you would have received as a refund has been included in your paychecks throughout the year.

The Solution:

If you want to get more money back in your tax refund each year, we strongly suggest you reach out to the payroll department and fill out your w4 form as follows:

Step 1: Keep Box 1c marked as single. It doesn't matter if you are married; remember, our goal is to maximize your refund.

Step 2: Do not check the checkbox for multiple jobs. Most likely, you only have one job, so no need to worry about this.

Step 3: Leave these boxes in Step 3 at $0. This is where you elect to receive part of some tax credits in your paycheck, which can reduce your refund.

Step 4: In line 4(c), marked as “Extra withholding,” add any amount you can afford to have taken extra from your pay.

This serves two purposes:

1. If you are among those who have to pay back when you file, this is where you elect to pay more throughout the year, reducing what you owe at filing time.

2. For those who usually get a refund, this will increase your refund as it will calculate as overpaid and favorably adjust the calculations.

By following these steps, you can potentially see a higher refund next tax season. Adjust your W-4 accordingly and keep more of your hard-earned money with you!

We hope you have a wonderful summer. 🏖

Start planning today for a bigger tax refund tomorrow! 💪🏽🤑