How to Avoid Owing Money to the IRS
In the midst of tax season, you are probably trying to think of all the possible ways to save money on your annual tax return—for this year and in the future. No one wants to pay any extra money to the IRS and there are ways to avoid this and keep more money in your pocket. To avoid owing money on your taxes, take a look at the biggest reasons why Americans end up owing each year and see if you’re doing any of them.
Not Enough Withheld From Pay
If you find that you owe a significant sum of money to the IRS this year, you may want to check your withholdings and consider making a change (using Form W-4) so that more is taken out of your paycheck each month, and you owe less at tax time. Making a change is simple. Just get in touch with a representative in your HR department.
If your withholdings seem appropriate, it is also possible that you have received income during the year that has not been taxed. For example, could you have sold some stock or conducted some work on the side that was not taxed at the time? If that is the case, you will owe taxes with your annual return, eating away at any potential refund.
Another big culprit for a large and surprising tax bill can be a status change that you did not consider. For example, when one of your children moves out of the house and you can no longer claim them as your dependent, you will suddenly owe more in taxes. A home refinance may mean paying less in interest (and more in principal) on your mortgage, meaning you have less mortgage interest to deduct on your return. These seemingly small changes can really add up when it comes to owing money on your return.
Having Trouble Making Quarterly Estimates
If you know ahead of time that you are going to owe the IRS money, one thing that you can do is pay your debt in quarterly payment (estimates) so that you do not owe so much all at once. This is a great strategy, but if you get behind or your estimates are too low, you will still end up owing the IRS at the end of the year.
Self Employment Taxes
If you have recently made a move to self-employment, you may find yourself surprised by a higher than expected tax bill. That is because you become responsible for paying self-employment taxes, which include all of your social security and Medicare taxes. This can be quite jolting the first few tax years.
Success Tax Relief: Can Help You Avoid Paying Too Much To The IRS
If you are concerned that your tax bill is going to be large and want to have a second set of eyes review your return and see if more deductions can be found, consider hiring a tax firm for a quick review. This does not have to cost a significant amount of money and you may end up saving more than you spend.
Success Tax Relief has more than 30 years of experience in the business and can give you a quick and accurate assessment of your return and help you save this year on your return! Call Success Tax Relief today at 1-877-958-6638!