Reviewing the amount of taxes withheld can help taxpayers avoid having too
much or too little federal income tax taken from their paychecks. Having the
correct amount taken out helps to move taxpayers closer to a zero balance at
the end of the year when they file their tax return, which means no taxes owed
or refund due.
During the year, changes sometimes occur in a taxpayer’s life, such as in
their marital status, that impacts exemptions, adjustments or credits that they
will claim on their tax return. When this happens, they need to give their employer
a new Form W-4, Employee’s Withholding Allowance Certificate, to change their
withholding status or number of allowances.
Employers use the form to figure the amount of federal income tax to be
withheld from pay. Making these changes in the late summer or early fall can
give taxpayers enough time to adjust their withholdings before the tax year
ends in December.
Making a Withholding
Adjustment
In many cases, a new Form
W-4, Employee’s Withholding Allowance Certificate, is all that is needed to
make an adjustment. Taxpayers submit it to their employer, and the employer
uses the form to figure the amount of federal income tax to be withheld from
their employee’s pay.
The IRS offers several online resources to help taxpayers bring taxes paid
closer to what they owe. They are available anytime on IRS.gov. They include:
Self-employed taxpayers, including those involved in the sharing
economy, can use the Form 1040-ES worksheet to correctly figure their
estimated tax payments. If they also work for an employer, they can often forgo
making these quarterly payments by instead having more tax taken out of their
pay.
Source: Internal Revenue Service
contact@officetaxservices.com
(858)247-1680
Each year, many people get a larger refund than they expect. Some find they
owe a lot more tax than they thought they would. If this has happened to you,
review your situation to prevent a tax surprise. Did you marry? Have a child?
Change in income? Life events can have a major impact on your taxes. Bring the
taxes you pay closer to the amount you owe. Here are some tips to help you come
up with a plan:
- New Job. When you start a new
job, you must fill out a Form
W-4, Employee's Withholding Allowance Certificate, and give it to your
employer. Your employer will use the form to figure the amount of federal
income tax to withhold
from your pay. Use the IRS Withholding Calculator to help you
fill out the form. This tool is easy to use and it’s available 24/7.
- Estimated Tax. If you earn income that
is not subject to withholding you may need to pay estimated
tax. This may include income such as self-employment, interest,
dividends or rent. If you expect to owe $1,000 or more in tax, and meet
other conditions, you may need to pay this tax. You normally pay it four
times a year. Use the worksheet in Form
1040-ES, Estimated Tax for Individuals, to figure the tax.
- Life Events. Check to see if you
need to change your Form W-4 or change the amount of estimated tax you pay
when
certain life events take place. A change in your marital status, the
birth of a child or the purchase of a new home can change the amount of
taxes you owe. In most cases, you can submit a new Form W–4 to your
employer anytime.
- Changes in
Circumstances.
If you are receiving advance payments of the premium
tax credit, it is important that you report
changes in circumstances, such as changes in your income or family
size, to your Health Insurance Marketplace. You should also notify the
Marketplace when you move out of the area covered by your current
Marketplace plan. Advance payments of the premium tax credit help you pay
for the insurance you buy through the Health Insurance Marketplace.
Reporting changes will help you get the proper type and amount of
financial assistance so you can avoid getting too much or too little in
advance.
Source: Internal Revenue Service
contact@officetaxservices.com
(858)247-1680
Many students get summer jobs. It’s a great way to earn extra spending money
or to save for later. Here are some tips for students with summer jobs:
1. Withholding and Estimated Tax. If you are an
employee, your employer normally withholds
tax from your paychecks. If you are self-employed, you may be responsible
for paying taxes directly to the IRS. One way to do that is by making estimated
tax payments on set dates during the year. This is essentially how our
pay-as-you-go tax system works.
2. New Employees. When you get a new job, you need to
fill out a Form
W-4, Employee’s Withholding Allowance Certificate. Employers use this form
to calculate how much federal income tax to withhold from your pay. The IRS
Withholding Calculator tool on IRS.gov can help you fill out the form.
3. Self-Employment. Money you earn working for others
is taxable. Some work you do may count as self-employment.
These can be jobs like baby-sitting or lawn care. Keep good records of your
income and expenses related to your work. You may be able to deduct
those costs. A tax deduction generally reduces the taxes you pay.
4. Tip Income. All tip
income is taxable. Keep a daily log to report your tips. You must report
$20 or more in cash tips received in any single month to your employer. And you
must report all of your yearly tips on your tax return.
5. Payroll Taxes. You may earn too little from your
summer job to owe income tax. But your employer usually must withhold social
security and Medicare taxes from your pay. If you’re self-employed, you may
have to pay them yourself. They count for your coverage under the Social
Security system.
6. Newspaper Carriers. Special rules apply to a newspaper
carrier or distributor. If you meet certain conditions, you are
self-employed. If you do not meet those conditions, and are under age 18, you
may be exempt from Social Security and Medicare taxes.
7. ROTC Pay. If you’re in ROTC, active
duty pay, such as pay you get for summer advanced camp, is taxable. Other
allowances you may receive may not be taxable, see Publication
3 for details.
Visit IRS.gov for more about the tax
rules for students.
Source: Internal Revenue Service
contact@officetaxservices.com
(858)247-1680
