Did you have any struggles filing your taxes last year? We get it, tax laws are constantly changing and they can be really difficult to understand. The most recent change in tax legislation is bringing about a change to the Form W-4 to allow for updated tax withholdings. This new form will most likely require you to provide additional pieces of information about sources of income and spousal income. If you got bit by being under withheld and you owe the IRS as a result, contact Inside Out Tax Resolution Services to schedule your free consultation today.
Review Your Tax Return
The first step to discovering how well you have been doing with your tax returns is to review your last year’s return. If you have done a great job in the past, you most likely have a good foundation for the future. Unfortunately, previous success does not mean that you will be successful this coming year. A few major changes have been made this year that you need to account for in your tax withholdings. Once you review last year’s withholdings and tax return you can begin planning for which exemptions and tax credits you plan on claiming for this coming year.
Prep For Freelance Pay
Do you have a second job or do freelance work? If so, you are most likely not withholding enough on your normal paycheck and you could get dinged with a large tax bill at the end of the year. Make sure that you keep track of the amount of money that you make from freelance and secondary work. If the amount of money you make drastically rises or falls from last year, make sure you change your withholding accordingly.
Typically, people with any number of dependents were able to claim exemptions and in turn, were able to account for that in their withholdings. This recent law has removed many of the personal and dependent exemptions that made this possible. If you are in a higher income home, the good news is that the child tax credit has been expanded to include many more tax brackets, but it should not be banked on. Make sure that you reduce your withholdings if you plan to claim the same amount of dependents as last year to keep your tax bill down.
Just because you are retired does not mean that the changes in the tax bill do not affect you. Any money that you receive from Social Security can still be considered taxable income. This means that you still need to track your income and make all estimated tax payments where applicable.
Taxes are complicated, I get it. For some, it’s only a matter of time until a mistake is made. Tracking your income, withholding and payments is the best way to plan for tax season. If you have a tax problem or withholding issue, get in touch with Inside Out Tax Resolution Services today!