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A Mid-Year Tax Checkup May Be Appropriate
Article Highlights:
- Concerns About Proper Withholding
- Late IRS W-4 and Withholding Tables
- New W-4 Complications
- Self-employed Estimated Payments
- Events That Can Impact Taxes
One area of major concern is the amount of taxes individuals are withholding from their wages. Tax reform was passed late in 2017, and there was a considerable amount of confusion among employers related to the amount of taxes to withhold in 2018. It took the IRS a couple of months to come out with a revised Form W-4 (Employee's Withholding Allowance Certificate) and withholding tables, and even then, there were concerns about whether the revised and more complicated W-4s were being filled out correctly by employees and whether the revised W-4s were actually being submitted to employers at all. The IRS has even been issuing notices cautioning taxpayers to be sure they are withholding enough.
While most people will see an overall tax reduction as a result of the tax reforms, the amount of their refund or tax due hinges on the amount of pre-payments, which include withholding and estimated tax payments. All this confusion related to withholding can lead to unpleasant surprises at tax time. If you count on a refund each year, it might be appropriate to have this office run a mid-year tax projection to ensure that the projected refund will be as expected.
This is also true for retirees receiving pensions and Social Security benefits and for self-employed taxpayers who are making pre-payments via estimated taxes. You obviously do not want to pay too much and generally don’t want to end up with a huge tax liability. A mid-year check-up will allow adjustments to the 3rd- and 4th-quarter estimated tax payments so that the end result will be as desired.
Married couples with two working spouses, individuals with multiple jobs and situations in which taxpayers are both wage earners and self-employed cause the most difficulty in getting the prepayments correct. If you would like a mid-year projection and withholding check-up, please call for an appointment.
There are a number of other circumstances that can impact your taxes, and you probably should not wait until tax time to see the results. You could even be missing opportunities to decrease your prepayments and obtain more cash flow. With mid-year tax planning, you may be able to take steps to mitigate the tax impact of certain events and thus avoid unpleasant surprises before it is too late to address them. Here are some events that can significantly impact your tax liability:
- Getting married or divorced, or becoming widowed
- Changing jobs or your spouse starting to work
- Having a substantial increase or decrease in income
- Having a substantial gain from the sale of stocks or bonds
- Buying or selling a rental
- Starting, acquiring, or selling a business
- Buying or selling a main or vacation home
- Retiring or going to retire this year
- Being the beneficiary of an inheritance
- Giving birth to or adopting a child
- Making significant business purchases
- Having substantial investment income or gains from the sale of investment assets
- Making unplanned withdrawals from an IRA or pension plan
More About Us
Get to Know Prestige Accounting Services Group (previously Prestige Wealth Accounting Group)
Offices in Flemington, NJ and Califon, NJ
Our Mission: At Prestige Accounting Services Group (previously Prestige Wealth Accounting Group), we are on a mission to redefine the tax experience for individuals and small businesses. With a focus on personalized service, strategic planning, and expert guidance, we aim to empower our clients to succeed financially with confidence and ease.
Expertise in Action: With a wealth of experience and a team of dedicated professionals, we specialize in individual and small business tax preparation. While we excel in all areas of taxation, our passion lies in serving the unique needs of small business owners in New Jersey. We understand that small business taxation requires specialized knowledge and attention to detail, which is why we go above and beyond to ensure our clients receive the guidance and support they deserve.
Tailored Solutions for Every Client: Whether you're a high-net-worth individual seeking comprehensive tax planning or a small business owner in need of accounting and bookkeeping assistance, we have the expertise to meet your needs. Our team takes the time to understand your specific situation and develop customized solutions that align with your goals and objectives.
Why Choose Us?: What sets us apart from other New Jersey tax firms is our commitment to excellence and innovation in the field of taxation. We don't just prepare tax returns; we provide strategic insights, proactive planning, and actionable advice to help our clients achieve their financial goals. With a team of two CPAs, an EA, and an ERO, we have the expertise and resources to deliver exceptional service and results.
Your Success is Our Priority: At Prestige Accounting Services Group (previously Prestige Wealth Accounting Group), we measure our success by the success of our clients. We are dedicated to building long-lasting relationships, providing unparalleled service, and helping our clients thrive in today's ever-changing tax landscape.
We can't wait for you to experience the Prestige Accounting Services Group (previously Prestige Wealth Accounting Group) difference.
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