Have you been having enough taxes withheld from your paycheck this year? Have you experienced some unexpected financial changes? If you think you may be off in terms of taxes due, the IRS’s Tax Withholding Estimator can help you determine:
- If you have withheld too much and how to make an adjustment to put more cash into your own pocket now. (About 70% of taxpayers withhold too much toward their taxes every year, which typically results in a refund.)
- If you should withhold more or make an estimated tax payment to avoid a tax bill when you file their tax return next year.
The following things need to be considered when adjusting withholding for 2021:
- Coronavirus tax relief – Tax help for taxpayers, businesses, tax-exempt organizations, and others, including health plans, affected by coronavirus (COVID-19).
- Disasters such as wildfires and hurricanes – Special tax law provisions may help taxpayers and businesses recover financially from the impact of a disaster, especially when the federal government declares your location to be a major disaster area.
- Job loss – 4128, Tax Impact of Job Loss, explained how this unfortunate circumstance can create new tax issues.
- Workers moving into the gig economy due to the pandemic – The IRS advised people earning income in the gig economy to consider estimated tax payments to avoid a balance or penalties when they file.
- Life changes such as marriage or childbirth – Getting married or having a child are just a couple of life events that can affect your refund or how much you owe.
Taxes are generally paid throughout the year whether from salary withholding, quarterly estimated tax payments, or a combination of both. Taxpayers can pay online, by phone, or from the IRS2Go app. Finally, taxpayers can schedule payments for future dates, which can be useful during filing season, for payment plan payments or for estimated tax payments.
If you have questions about your 2021 taxes, withholding or anything else for that matter, let us know. We are happy to take a look at your situation and advise you on how to proceed.