Posted by Tax Crisis Rescue

IRS offering help with free withholding tax

IRS offering help with free withholding tax

What is the withholding tax?

Should you be an employee, your employer probably withholds income tax from your pay-check and remits it to the IRS in your name.

What is the estimated tax?

If you default in paying your taxes through withholding or don’t pay that way enough, you may have to pay the estimated fee. People who generally make their tax payment this way are self-employed.

Check your withholding tax

Prevent a surprise at tax time and check your withholding amount. Tax bill or penalty occurs if it’s too little as well as too much could result in you not having use of the money until you receive a tax refund.

If the changes to tax rates and withholding tax over the past year got you worked up, help is on the way. A free online information seminar on how to do a paycheck check-up will offer by the Internal Revenue Service (IRS). 

The Tax Cuts and Jobs Act (TCJA) introduced several changes beginning in 2018, which includes caps on state and local tax deduction a zeroed-out personal exemption amount, and the elimination of reimbursed job expenses. Also, new withholding tables were not available to employers until mid-January 2018, and some employees didn’t see a switch in withholding until mid-February 2018.

The merging of new rules, new withholding tables, and even new tax forms meant that many taxpayers didn’t withhold tax properly. The IRS in January 2019, advised that they will waive underpayment penalties so long as withholding and estimated tax payments total at least 85% of the tax reflected on the return for the 2018 taxable year.  

To Prevent the same kinds of problems next year, the IRS is encouraging taxpayers to plan. By linking your current tax data into the withholding calculator on the IRS website, you can avoid any nasty surprises at year end by doing a paycheck checkup. You should think of a checkup even if you did one in 2018: to be sure you’re withholding the right amount for 2019 another review can help. The IRS webinar will take you through how to use the online IRS Withholding Calculator. 

When to Check Your Withholding 

  • The beginning of the year
  • When there’s a change in tax law 
  • When you have life changes:
  • Wage pay - You or your spouse start or stop working or start or stop a second job
  • Taxable income not subject to withholding - Interest income, dividends, capital gains, self-employment income, IRA (including specific Roth IRA) distributions
  • Lifestyle - Marriage, separation, birth or adoption of a child, home purchase, retirement, filing chapter 11 bankruptcy
  • Adjustments to income - IRA deduction, student loan interest deduction, alimony expense
  • Itemized deductions or tax credits - Medical bills, taxes, interest expense, gifts to charity, dependent care expenses, education credit, child tax credit, earned income credit

Change Your Tax Withholding

  • To change your tax withholding, make use of the outcome from the Withholding Calculator to determine if you should:
  • Complete a new Form W-4, Employee’s Withholding Allowance Certificate, and get it across your employer.
  • Complete a new Form W-4P, ‘Withholding Certificate for Pension’ or  ‘Annuity Payments,’ and get it across to your payer
  • Before the end of the year make an additional or estimated tax payment to the IRS.

Some Services You Will Need To Check Your Withholding Tax

Tax preparer service

Tax preparers make ready and file federal and state tax returns for paying clients. They may work independently. They are expected to work under the supervision of a Certified Public Accountant (CPA), attorney, or other tax professional in some states.

Tax preparers are familiar with the various tax forms and schedules that the Internal Revenue Service (IRS) and state tax boards issue, and are comfortable using math and computers as well. Tax preparers go through in detail, your financial records and work with them to determine your tax duties and to identify tax credits and deductions for which you qualify. On your behalf, they fill the appropriate forms and submit them to the state and federal government, signing your name on the return to identify themselves as the preparer.

Accounting Service

An accountant carries out financial functions related to the collection, accuracy, recording, analysis, and presentation of your business, organization or company's monetary operations. In a small scale business, an accountant's primary role may consist of data collection, entry and report generation. An accountant may function as an adviser and financial interpreter, that present your company's economic information within and outside of the business the to larger sized companies. In General, the accountant can also deal with third parties, such as your customers, vendors and financial institutions.

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