Did your tax refund shrink?

By Erica Stark, Licensed Financial Advisor, Tax Specialist, Founder of TAPP Financial

If you’re among the 79% of people in Ohio who receive an annual federal tax refund, you may have noticed that your refund shrank considerably in 2024 compared to previous years.

In a nutshell, because of inflation, tax brackets have shifted higher. This means that federal withholding for W-2 employees doesn’t kick in until an employee has made a certain amount of money, which is higher than in previous years. Essentially, this puts more money in your pocket throughout the year, which results in a lower refund at year’s end.

What determines that “certain amount” is based on how you file your W-4, a form you fill out when you’re first hired. Oftentimes people don’t realize that they can also change that form at any time during employment. It should be reviewed annually. After you make changes your form, you need to submit it to your employer.

There are several considerations to filling out the W-4 that impact your tax situation:

• The more dependents you claim, the less will be withheld from your paycheck.
• Claiming Single, you will have more withheld than if you claim Married or Head of Household.
• There is a line at the bottom of the W-4 where you can have a set additional amount withheld per paycheck. I usually recommend using this line if you want more of a tax re-fund at the end of the year. Even $5-$10 dollars per pay can make a difference.

To follow the best course of action to fit your unique situation, I would not recommend making changes to your W-4 without first consulting with your tax advisor or someone in the HR department for your employer. Feel free to give me a call with any questions.

TAPP Financial is located at 7003 Pearl Road, Suite 17B, in Middleburg Heights. Call 440-885-3133 or visit Tapp-Financial.com.