Time To Review Your Withholding

Blog, Tax Services

With the end of 2023 rapidly approaching, the IRS encourages taxpayers to use this “window of opportunity” to review their current withholding status as soon as possible to make any necessary adjustments to their withholdings, to potentially avoid a surprise when filing a tax return next year.
Although it’s most advantageous for taxpayers to verify withholdings early in the year, an adjustment made in the final weeks of 2023 could still help to avoid an unexpected result, such as a big refund or a balance due, when filing taxes next year.

Tax Withholding Estimator:
The Tax Withholding Estimator, located on the IRS website can assist taxpayers with determining if they have too much income tax withheld and if so, proper guidance on how to adjust tax withholding. This estimator provides workers, retirees, self-employed individuals and other taxpayers a simple-to-use method to calculate the correct amount of income tax they should have withheld from wages and pension payments based on their complete set of facts and circumstances. By using this beneficial tool, taxpayers might be able to withhold more or make an estimated tax payment to avoid a tax bill when they file their 2023 tax return.

Taxpayer options to pay as they go:
Taxes are generally paid throughout the year. Employers typically withhold income tax from their employees’ salary and pay it to the IRS on the employee’s behalf. However, it’s estimated about 70% of taxpayers withhold too much every year resulting in a refund. Although, a refund is never a guarantee, proper withholding adjustments can assist taxpayers by ultimately boosting take-home pay rather than be over-withheld and in turn have to wait to receive it back as a tax refund.
The IRS reminds individuals earning income that’s not subject to withholding, such as gig economy, self-employment or income from rental properties, to consider making quarterly estimated tax payments to avoid a balance due or penalties when filing a tax return. Taxpayers may send estimated tax payments with Form 1040-ES by mail, or pay online, by phone or by accessing the IRS2Go App on a mobile phone. Additionally, taxpayers can make estimated tax payments through their Online Account, where they can also see their payment histories and other tax records. To create an Online Account, go to IRS.gov/account.

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