IRS Offers Tips to Reduce Big Refunds and Prevent Tax Bills
Posted by Patricia Quinn McMahon on Friday, August 24, 2012 Under: Business Owners
IRS Offers Tips to Reduce Big Refunds and Prevent Tax Bills
The Internal Revenue Service reminds taxpayers that it's not too late to adjust their 2012 tax withholding to avoid big tax refunds or tax bills when they file their tax return next year.
Taxpayers should act soon to adjust their tax withholding to bring the taxes they must pay closer to what they actually owe and put more money in thei
Employees
New Job. When you start a new job your employer will ask you to complete Form W-4, Employee's Withholding Allowance Certificate. Your employer will use this form to figure the amount of federal income tax to withhold from your paychecks. Be sure to complete the Form W-4 accurately.
Life Event. You may want to change your Form W-4 when certain life events happen to you during the year. Examples of events in your life that can change the amount of taxes you owe include a change in your marital status, the birth of a child, getting or losing a job, and purchasing a home. Keep your Form W-4 up-to-date.
You typically can submit a new Form W–4 at anytime you wish to change the number of your withholding allowances. However, if your life event results in the need to decrease your withholding allowances or changes your marital status from married to single, you must give your employer a new Form W-4 within 10 days of that life event.
Self-Employed
Form 1040-ES. If you are self-employed and expect to owe a thousand dollars or more in taxes for the year, then you normally must make estimated tax payments to pay your income tax, Social Security and Medicare taxes. You can use the worksheet in Form 1040-ES, Estimated Tax for Individuals, to find out if you are required to pay estimated tax on a quarterly basis. Remember to make estimated payments to avoid owing taxes at tax time.
Publication 505, Tax Withholding and Estimated Tax, has information for employees and self-employed individuals, and also explains the rules in more detail. The forms and publication are available at IRS.gov or by calling 1-800-TAX-FORM (1-800-829-3676).
Links:
Form W-4, Employee's Withholding Allowance Certificate
Form 1040-ES, Estimated Tax for Individuals
Form W-4P, Withholding Certificate for Pension or Annuity Payments
Publication 505, Tax Withholding and Estimated Tax
Source: www.IRS.gov
The Internal Revenue Service reminds taxpayers that it's not too late to adjust their 2012 tax withholding to avoid big tax refunds or tax bills when they file their tax return next year.
Taxpayers should act soon to adjust their tax withholding to bring the taxes they must pay closer to what they actually owe and put more money in thei
r pocket right now.
Most people have taxes withheld from each paycheck or pay taxes on a quarterly basis through estimated tax payments. Each year millions of American workers have far more taxes withheld from their pay than is required. Many people anxiously wait for their tax refunds to make major purchases or pay their financial obligations. The IRS encourages taxpayers not to tie major financial decisions to the receipt of their tax refund - especially if they need their tax refund to arrive by a certain date.
Here is some information to help bring the taxes you pay during the year closer to what you will actually owe when you file your tax return.
Most people have taxes withheld from each paycheck or pay taxes on a quarterly basis through estimated tax payments. Each year millions of American workers have far more taxes withheld from their pay than is required. Many people anxiously wait for their tax refunds to make major purchases or pay their financial obligations. The IRS encourages taxpayers not to tie major financial decisions to the receipt of their tax refund - especially if they need their tax refund to arrive by a certain date.
Here is some information to help bring the taxes you pay during the year closer to what you will actually owe when you file your tax return.
Employees
New Job. When you start a new job your employer will ask you to complete Form W-4, Employee's Withholding Allowance Certificate. Your employer will use this form to figure the amount of federal income tax to withhold from your paychecks. Be sure to complete the Form W-4 accurately.
Life Event. You may want to change your Form W-4 when certain life events happen to you during the year. Examples of events in your life that can change the amount of taxes you owe include a change in your marital status, the birth of a child, getting or losing a job, and purchasing a home. Keep your Form W-4 up-to-date.
You typically can submit a new Form W–4 at anytime you wish to change the number of your withholding allowances. However, if your life event results in the need to decrease your withholding allowances or changes your marital status from married to single, you must give your employer a new Form W-4 within 10 days of that life event.
Self-Employed
Form 1040-ES. If you are self-employed and expect to owe a thousand dollars or more in taxes for the year, then you normally must make estimated tax payments to pay your income tax, Social Security and Medicare taxes. You can use the worksheet in Form 1040-ES, Estimated Tax for Individuals, to find out if you are required to pay estimated tax on a quarterly basis. Remember to make estimated payments to avoid owing taxes at tax time.
Publication 505, Tax Withholding and Estimated Tax, has information for employees and self-employed individuals, and also explains the rules in more detail. The forms and publication are available at IRS.gov or by calling 1-800-TAX-FORM (1-800-829-3676).
Links:
Form W-4, Employee's Withholding Allowance Certificate
Form 1040-ES, Estimated Tax for Individuals
Form W-4P, Withholding Certificate for Pension or Annuity Payments
Publication 505, Tax Withholding and Estimated Tax
Source: www.IRS.gov
In : Business Owners
Tags: tax employee tax self employ tax
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Hello, my name is Patricia McMahon. I am the owner of McMahon Bookkeeping Services.
With 25 years of administrative, and bookkeeping skills, I have earned my experience with working with small business to large Corporations such as IBM. I started my Bookkeeping business in April of 2005.
It has been an honor to help service other business owners with their bookkeeping needs. Knowing that my service helps other business owners keep their business running efficiently, gives me a lot of pride. I look forward to my work every day, and meeting more professionals to work with.
I am also a mother of a beautiful 9 year old daughter.
