Summer is the perfect time for you to review your tax withholding and plans for the current tax year. Here are a few items to consider:
Are You Withholding the Correct Amount of Taxes?
The federal income tax is a pay-as-you-go system. You should pay income tax as you earn or receive income during the year. You can avoid a surprise at tax time by checking your withholding amount during the year, well before this year’s tax return is due. Remember, that your employer withholds income taxes based on what you told the company when you completed the IRS Form W-4. Don’t remember filling out this form? That’s a good sign that you should check if enough taxes are withheld from each of your paychecks.
- If you like to do things yourself, check out the IRS Withholding Calculator on IRS.GOV. This calculator will make sure your withholding amounts are correct.
- For clients of Mark Schwanbeck Tax Preparation, I will perform the W-4 check for you. I will need you and your spouse’s latest pay stubs. I can let you know if you need to change your income tax withholding and provide the W-4s for your signature.
- If you are not already a client, there is a $50 fee to review your income tax withholding. I will need your pay stubs and your latest tax return. The W-4 review fee will be credited to next year’s tax return invoice, should you decide to use me as your tax return preparer. Contact me for more information.
Are Your Tax Records Up To Date?
You should develop a system that keeps all your important information together. You can use a software program for electronic record-keeping, or you could also store paper documents in labeled folders. Clients of Mark Schwanbeck Tax Preparation can upload their documents to their Citrix ShareFile folder.
Throughout the year, you should add tax records to your files as you receive them. Having records readily at hand makes preparing a tax return easier.
It may also help you discover potentially overlooked deductions or credits. Records that you should keep include receipts, canceled checks, and other documents that support income, a deduction, or a credit on a tax return.
You should also save records relating to any property you will be selling in the future. Keep the closing documents and receipts for any significant remodeling or upgrades related to the property. You will need these records to figure the basis for computing gain or loss when you sell the property.
In general, the IRS suggests that you keep records that were used to prepare a tax return for three years from the date you filed the return. The tax return itself should be kept permanently.
Does the IRS Have Your Current Address?
You should notify the IRS and the Social Security Administration of a legal name change to avoid a delay in processing their tax return. See my article on updating your address: Click Here.