Sep 6, 2012

Can You Pay My IRS Bills: IRS Offers Tips to Reduce Big Refunds and Prevent Tax Bills




Here is a word from the Goodfellas at the IRS:

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 their 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.

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).

3 comments:

Winston Sutton said...

Rejoice, for this has come from the IRS itself! This alert should not be disregarded. The main point is neither to withhold too much to avoid a big tax refund nor withhold too little to avoid a high tax bill. Every American taxpayer will surely benefit from these basic tips, Jamaal.

-->Winston Sutton

Clemencia said...

All I can say is to still be honest with your return files. You may not imagine the trouble you would have to go through to settle wrong data on your file. Give yourself ample time to do your filing, so you could thoroughly review every detail you give without any pressure of fleeting time constraints.

- Clemencia Summers -

Parris Moretti said...

You said it right, Clemencia. Don’t let yourself settle with and file wrong and incomplete data. This will give you a lot more problems in the future. And it’s really disturbing on your part especially when you know that you’re not paying the right amount of tax.


Parris Moretti