Adjusting your tax withholding can provide more income for you to pay your existing mortgage. If your employer decreases your hours, adjusting your withholding can make up the difference needed to remain current on your mortgage obligation. Your employer bases your withholding on the information you provided when you filled out your Internal Revenue Service Form W-4. Withholding certificates do not take into account the deduction you receive for paying interest on your home loan if you itemize your deductions.
1. Make a budget to determine how much extra money you need to pay your mortgage. List your income and all of your mandatory expenses. Omit any unnecessary expenditures.
2. Divide your mortgage shortage by the number of pay periods you have each month. For example, if you are $100 short of being able to pay your home loan each month and you receive your pay on a weekly basis, you must calculate your tax withholding in a way that provides you with an extra $25 per week.
3. Ask your employer to show you the Form W-4 that he uses to calculate your withholding. Inspect the document to determine your claimed filing status and number of allowances. Some people claim single as their filing status with no dependents to increase tax withholding to provide a larger tax refund. If you did this and your actual filing status is married with allowances for children, typically you can adjust your withholding without underpaying your tax.
4. Download the Internal Revenue Service's Publication 15 for the current tax year. Open the tax table and look at the withholding amount for your current W-4 information. For example, if you currently show filing as a single with no dependents and your gross pay is $500 per week, your current withholding amount is $62.
5. Look at the table that represents your actual information. For example, if your filing status is actually married, filing jointly and you have no dependents; your withholding amount is $37. The difference between what you are paying and what you should be paying is $25 if you make $500 per week.
6. Request a new W-4 from your employer or download one from the IRS. Complete the form with your new information and return it to your employer. Ask him to adjust your withholding based on the new W-4.
- Typically, lenders have programs in place to assist homeowners who suffer a financial setback. Call your lender and explain your situation to see if there is anything that it can do to help you keep your home.
- You are liable for any uncollected tax if you decrease your withholding too much. The IRS assesses penalties on taxpayers who underpay their tax by $1,000 or more.
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