Abstract: Many people are distressed
to find they owe money when they file their federal tax returns. When that
happens, taxpayers might want to change their withholding so that it doesn’t
happen again the following year. Another
reason to consider adjusting withholding is when a taxpayer gets a big refund,
which essentially means the government got a tax-free loan of the taxpayer’s
money.
If
you were distressed to find you owed money when you filed your last federal tax
return, you might want to change your withholding so that this doesn’t happen
again. You might even want to adjust your withholding if you got a big refund, because
you’re essentially giving the government a tax-free loan of your money.
Adjust if
necessary
Taxpayers
should periodically review their tax situations and adjust withholding, if
appropriate. The IRS has a withholding calculator to assist you in conducting a
paycheck checkup. The calculator reflects tax law changes in areas such as
available itemized deductions, the child credit, the dependent credit and the
repeal of dependent exemptions. The calculator can be accessed here: https://bit.ly/33iBcZV
Life changes
In
addition to tax law changes, the IRS recommends that you perform a checkup if
you:
To
modify your withholding at any time during the year, simply submit a new Form
W-4 to your employer. Changes typically go into effect several weeks after a
new Form W-4 is submitted. (Estimated tax payments can be adjusted each time you
make an estimated payment to the IRS.)
Plan ahead
There’s
still time to remedy any shortfalls to minimize taxes due for 2023, as well as
any penalties and interest. Contact us if you have any questions or need
assistance.
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