TAX ACCOUNTING NEWS
Tax filing season is here again, and millions of hardworking Americans are already dreaming of those fat refund checks. Unfortunately, many of them may be disappointed this year.
The combination of recent changes to the tax law and updates to employer withholding tables have shrunk the size of tax refunds — and left some unlucky taxpayers with a bill instead of a check. Instead of making plans to spend their windfall, these taxpayers are struggling to pay the unexpected tax bill.
So, what can you do if you find yourself in this uncomfortable situation? How can you avoid ending up with a big tax bill this year? Here are some tips to help you avoid a tax bill and some advice on what to do if you get one.
Thanks to recent changes in the tax law, you may have seen a boost in the size of your paycheck. And while that is ultimately a good thing, the reduced withholding could mean a smaller refund, or even a tax bill, when you file.
If you want to avoid a tax day surprise, pay close attention to your paychecks, especially the amount withheld for federal taxes. If you see the withholding has gone down, you can ask your employer to adjust it to make sure you're withholding the right amount. That will mean a smaller paycheck now, but it could save you future tax debt and penalties.
You do not have to wait for tax filing season to estimate how much you might get back or how much you might owe. As long as you have your final paycheck from last year and some basic information, you can run the numbers and get a good idea of where you stand.
You will need as much information as you can get on your income and deductions, so gather as much documentation as you can. Armed with those numbers, you can estimate your future taxes using your favorite tax prep software or your calculator.
If you do owe money to the IRS, it pays to know about it as soon as possible. Filing as soon as you can means you will have more time to make a plan and find the money to pay the taxes due.
Keep in mind that paying late could mean additional penalties and interest, so it makes sense to settle up as quickly as you can. By filing early, or at least running the numbers, you will know where you stand.
Good News: The IRS has several debt settlement options including their Fresh Start Initiative and is generally willing to settle with taxpayers who have been blindsided by a surprise tax bill and get pay it off in full. Hopefully, tax filing season will bring the big fat refund you are expecting, but it is important to be prepared for the unexpected. The new tax bill has unleashed a host of unintended consequences, including smaller refunds and surprise tax bills. By being prepared, you can reduce the pain of a surprise tax bill.
Contact us for more information or assistance with your tax returns.
• Year End Tax Planning and Estimate Tax Payments
• Gift giving, Estates, and the unified credit
• Reasonable Compensation for Employee-Shareholders
• Resolving notices received from the IRS
• Taxation issues related to retirement planning
• Executive Compensation planning
• Tax penalties, interest disputes, and offers in compromise
• Year-end tax planning and estimated tax payments
• Tax implications of litigation
• Divorce and support agreements
Corporate Internal Investigations
White Collar Criminal Defense
Asset Recovery Services
Dispute Advisory Services
Due Diligence Reviews
Fraud Prevention Seminars & Training
Data Mining & Electronic Discovery
Corporate Compliance Monitorships
Fraud and Compliance Seminars & Training
Expert Witness Testimony
Economic Damage Analysis
Intellectual Property Damages
Lost Personal Earnings
Government Contract Accounting
Mergers & Acquisitions
Construction Claims & Project Audits
Individual, Trust, and Estate
S-Corp & C-Corp, Partnership
Year-end Tax Planning and Estimated Tax
Taxation of Executive Compensation
Reasonable Compensation Estimates
Retirement Savings Planning
Employer Retirement Plan Development
Have questions or need assistance?