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.