Tax Withholding Tips

Each tax season, you’ll find two main groups of people.  

In the first group, you’ll have individuals who have paid too much in taxes throughout the year and who, thus, get a large refund come tax time. Then, in the second group, there are people who haven’t paid enough in taxes and who find themselves facing a large tax bill and, in some cases, tax penalties. Really, either situation isn’t ideal and can be a sign that you need to adjust your tax withholdings. Obviously, though, the latter situation is infinitely worse, though there are some easy ways to prevent it. 

Review Your Withholdings Regularly  

Tax situations can change rapidly. Just because you got a refund one year doesn’t mean you won’t be facing a large bill the next. Things like changing tax reform, as well as general life changes, such as getting a new job, getting married or divorced, having children, and more can all affect your tax situation.  

For this reason, it’s important to review your withholdings regularly, preferably at the beginning and end of each tax year and ideally with the help of a tax professional. Regular reviews can ensure you adjust your withholdings in a way that always benefits you and your current situation as much as possible.  

What to Do if You’ve Underpaid  

Perhaps you didn’t follow this wise advice or you found it too late, and now you’re staring down a major tax liability. This can happen to anyone, and if it befalls you, don’t panic!  

First of all, know that you have until the actual filing deadline to pay your balance. If you can do that, then you won’t have to worry about interest or most penalties. If you can’t, then you can take action by requesting an installment agreement with the IRS or finding alternate ways, such as a personal loan, to pay what you owe. No matter what, don’t ignore your tax debt. Maintain regular communication with the IRS and try and work something out. Then, take steps to avoid this same situation in the future.  

Ultimately, finding the perfect withholding balance is tough. But, with the right help and some careful thought and planning, it can be done. Remember, though, not to beat yourself up for past mistakes but to simply focus on moving forward and making positive changes.

Strange Tax Deductions You Didn't Know Exist

Tax season is here yet again, and, if you’re like most people, you’re eager to take advantage of any deductions or credits you can. And, while most people know about the basic deductions, it might surprise you to learn that there are some rather “off the wall” deductions out there, some of which can save you big money.   

Of course, you have to know about these deductions in order to benefit from them, so read on to learn about some strange but worthwhile deductions and to see if they apply to you.

Cruisin’

A luxurious cruise might seem like the last thing you can write off, but believe it or not, in some cases, you can!

If the cruise is business-related in some way, you can typically write off a large chunk of it. This is true if you’re traveling to a business function via cruise or if the function takes place on the ship itself.

As with most deductions, there are eligibility requirements and deduction limits, but if you’ve taken a business-related cruise this year, talk with your tax adviser about how much you can write off!

Gambling Costs

You probably already know, especially if you’re a gambling man (or woman), that the IRS requires you to report any and all gambling winnings. While that’s not necessarily good news, keep in mind that the reverse is also true.

You can deduct gambling losses on your tax forms under the “other miscellaneous deductions” line. Thus, if you have a bad poker game or don’t get lucky at the slots, you don’t have to panic.

Just make sure you can prove your claims just in case the IRS asks you to verify the losses you’ve deducted.

Honoring the History of Your Home

Have you ever seen those houses, often located in known historic districts, that are as much tourist attractions as they are homes? You know, the type that look like a literal “blast from the past.”Well, there’s a good reason that most of these homeowners don’t mind the gawkers and that they leave their homes untouched.

Many owners of historic homes or other spaces enjoy nice tax deductions for partnering with a historic preservation group and either leaving their homes the same or performing only recommended upkeep and remodeling.

If you own property in a historic district, call local preservation societies, if you haven’t already, to see if they’d be interested in helping you preserve your home...and your money in the process.

Helping Your Furry Friends

If you’ve ever considered fostering pets in your home, you’ll be glad to know that fostering animals can result in a nice tax deduction for any costs incurred in the process.

To make sure everything goes smoothly, work only in conjunction with legitimate nonprofit animal rescue organizations and, as always, keep receipts and other proof of any money spent.

As you can see, there are all kinds of deductions you can take; don’t be afraid to branch out and try some of these if they apply to you. Just seek guidance from a tax professional whenever you try out a new deduction to ensure you do everything correctly.

Related articles

• Tax Deductions – I Can Get a Deduction For That? (allstate.com)