Limit the Impact of New Income Withholding (i.e. Income Tax)

Withholding Going Up But You Can Limit the Impact on Your Paycheck

Beginning November 1st, the state increased withholding by 10%. Officials are saying that this is not a tax increase because at tax time you will owe no more than before the increase.

Wrong!

It is a tax increase because all withholding is borrowing money from taxpayers without paying interest, and an increase in withholding is borrowing more money without paying interest. The result is more money for government and less for taxpayers, which to reasonable people is a tax increase.

Many taxpayers declare fewer dependents than the number to which they are legally entitled to assure that their tax liability is fully covered. If you are in that category, you have the ability to counter this grab for more of your money by changing the number of dependents you declare.

To change the number of dependents you declare, you will need to fill out a DE-4 form available on the Employment Development Department (EDD) website if you want your decreased withholding to just apply on the state level. To download the form, Click Here.

CAUTION: If you reduce your withholding to offset this increase, make sure you don't under-withhold. There are penalties if you do so. If in doubt, consult a tax professional.