April tax return time is also a good time to review your UC payroll tax withholding to make sure it is correct for 2008. If you owe lots of taxes for last year, you may be under-withholding, and if you will receive a large refund, you may be over-withholding.

You can make tax withholding adjustments any time during the year by going online and selecting “Tax Withholdings” under “Income & Taxes.” You may also ask the person in your department who handles payroll matters for a paper Form W-4 to change your federal and state withholding.

It is a good idea to review your withholding and make necessary changes whenever there are significant changes in your financial, lifestyle, or tax status. Such changes include increases or decreases in your UC salary and other sources of income, purchase or sale of real estate, expected significant capital gains or losses, expected significant changes in itemized deductions, marriage or divorce, and acquisition or loss of dependents for whom you can claim tax exemptions.

The IRS provides two publications with detailed withholding information and step-by-step instructions on how to calculate your withholding: Publication 505, Tax Withholding and Estimated Tax, and Publication 919, How Do I Adjust My Tax Withholding?  The IRS withholding-related publications are available online or by phone (1-800-829-3676).

Your state taxing agency has similar online information that you can use at the same time that you review your federal tax withholding. California residents should go to ftb.ca.gov.

If you use a tax advisor or accountant, he or she also can review and recommend withholding adjustments for 2008.  Some of the commercial online and software tax preparation services that are now available also have tools to help you calculate and adjust your withholding.