If you had a tax season surprise and saw a smaller than usual refund, or maybe even had to pay taxes, you may be wondering what happened. Wasn’t the new Tax Cuts and Jobs Act supposed to save you money on your taxes? Withholding may be the number-one reason for filers seeing an unexpected change in their refund. In 2018 the IRS adjusted the withholding tables. This change reduced the amount of taxes taken out of each pay check. The revision also aligned with the lower taxes they expected most people to pay under the TCJA. The IRS website encouraged people to complete a “paycheck checkup” and adjust their withholding accordingly. But most people either didn’t receive the message or didn’t understand why it mattered. This brings up an important point: Getting a refund may seem like a good thing. But it actually means you over-withheld from your paycheck and gave the government an interest-free loan. While it’s understandable to look forward to a tax refund, that’s an inefficient saving and investing strategy. It’s generally best to withhold just enough to cover your tax bill or even to owe a little bit when you file your tax return. In the end, your total taxes due is the number you should really be paying attention to instead of focusing on whether you received a refund or owe additional taxes on Tax Day. So, consider checking your withholding once or twice a year to stay on track to a targeted withdrawal amount. If you haven’t run the numbers, you can use the IRS withholding calculator or meet with a tax professional to determine the correct withholding you need to meet your goals. Then, update your W-4 and provide your employer with the updated document. You also want to be sure that you don’t end up under-withholding too much, which could result in penalties. For more tips on managing your taxes efficiently, watch the other videos in this series, or, visit schwab.com/taxstrategies.