Tips for Better Tax Withholdings

Sometimes, tax time offers a nice surprise: you get a refund. Other times, however, it’s more of a nasty shock: you owe a lot in taxes.  

When the latter happens, it’s often because your tax withholdings throughout the year have not been ideal.

Thankfully, however, this is something you can easily change, especially if you have the help of a qualified tax professional on your side.

Try a Projected Tax Return

If you’re concerned about improper or unhelpful tax withholdings, try creating a projected tax return for the coming year. Fill out tax return forms with up to date information and then estimate your income and deductions.

From there, you’ll be able to use the IRS’ free withholding tax calculator to view suggested withholdings, which should provide you with the information you need to adjust your withholdings for more desirable results come tax time.

Decrease Allowances

The simplest way to decrease the amount of taxes you owe each year is to decrease the number of allowances you take. This means you’ll see a little less of your money throughout the year, but that you’re also less likely to owe a huge bill at tax time.

Your employer can provide you with information on the allowances you take. However, in most cases, they cannot provide guidance or advice, which is why you’ll want to turn to a tax professional for assistance.

Set Aside Some Money

If you find that, no matter what you do to adjust your tax withholding, you still end up owing more than you’re easily able to pay each year, the only solution is to start saving early.

Each month or every few months, depending on your tax liability, put aside a little money to pay towards your taxes. If you can do that regularly, you’ll have the money you need when it comes time to pay your bill.

Taxes, as you can see, can be tricky. But, with the right help and some careful planning, tax time doesn’t necessarily have to be a dreaded, awful event.