With 2023 hurtling towards its end, the IRS urges taxpayers to review their withholding without delay. This proactive step can prevent an unwelcome surprise come tax season next year. Don’t let a lower-than-expected refund or unexpected tax bill accompanied by underpayment penalties catch you off guard. Curious to learn how? Check out this video for expert tips!
Have you been keeping tabs on your withholding and estimated tax payments? Are you confident they’ll adequately cover your tax liability or deliver a pleasant refund when you file your 2023 return? Time is ticking, with only a few weeks left in the year. If you haven’t checked your withholding recently, especially if you’ve experienced an increase in income this year, now’s the time to act.
The good news? You still have time to adjust your withholding and estimated taxes. This can help ensure you’ve paid your fair share throughout the year and minimize the risk of underpayment penalties. Let’s delve into some key steps you can take to optimize your withholding and embrace a stress-free tax season:
1. Recalibrate Your Withholding
- Review your Form W-4: This form dictates how much federal income tax your employer withholds from each paycheck. If your life circumstances have changed (e.g., new dependents, side hustle income), your W-4 might no longer accurately reflect your situation. Use the IRS’s Tax Withholding Estimator to assess your withholding needs and determine if adjustments are necessary.
2. Embrace Estimated Tax Payments
- Self-employed or have significant income outside your regular paycheck? Estimated tax payments may be your saving grace. These prepayments help avoid a hefty tax bill come April and potential underpayment penalties. Use the IRS’s Estimated Tax Calculator to determine your estimated tax obligation and make timely quarterly payments.
3. Leverage Additional Withholding Strategies
- Contribute to retirement accounts: Increasing contributions to pre-tax retirement plans like a 401(k) or IRA can lower your taxable income and boost your withheld taxes.
- Claim itemized deductions: If you anticipate claiming significant itemized deductions (e.g., medical expenses, mortgage interest), consider adjusting your withholding to account for them.
Remember, withholding is not a one-time act; it’s an ongoing process. Regularly reviewing your withholding throughout the year ensures you’re on track and avoids unpleasant surprises.
Feeling stressed about taxes? We can help! Our tax experts are here to guide you through the complexities of withholding, estimated taxes, and other smart tax strategies. Let us ease your burden and ensure a smooth, worry-free tax season. Contact us today to schedule a consultation and navigate the tax landscape with confidence.