Can you believe it’s almost 2015?
The past year has certainly gone by at warped speed and there are just a few months to complete the rest of your tax planning. You can still initiate a few actions to make sure your tax planning coincides with your financial objectives and retirement plan. The IRS suggests the following items before the year ends:
Adjust your withholding elections: If you’re an employee and you think your tax withholding may not account for your total 2014 tax liability, you could possible avoid an unexpected tax bill by increasing your withholding. If you are having too much tax withheld, you may get a larger refund than you expect. In either case, you can complete a new Form W-4, Employee’s Withholding Allowance Certificate and give it to your employer. Enter the added amount you want withheld from each paycheck until the end of the year on Line 6 of the W-4 form.
Report changes in circumstances: If you purchase health insurance coverage through the Health Insurance Marketplace, you may receive advance payments of the premium tax credit in 2014. It is important that you report changes in circumstances to your Marketplace so you get the proper type and amount of premium assistance. Some of the changes that you should report include changes in your income, employment, or family size. Advance credit payments help you pay for the insurance you buy through the Marketplace. Reporting changes will help you avoid getting too much or too little premium assistance in advance.
Change taxes with life events: A change in your marital status or the birth of a child can change the amount of taxes you owe. You can submit a new Form W–4 at work or change your estimated tax payment whenever these events occur.
Make sure your W-4 is correct: When you start a new job you fill out a Form W-4. It’s important for you to accurately complete the form. For example, special rules apply if you work two jobs or you claim tax credits on your tax return. Your employer will use the form to figure the amount of federal income tax to withhold from your pay.
If required, pay estimated taxes: If you get income that’s not subject to withholding you may need to pay estimated tax. This may include income such as self-employment, interest, or rent. If you expect to owe a thousand dollars or more in tax, and meet other conditions, you may need to pay this tax. You normally pay the tax four times a year.
What are you planning to do before year end? What tax issues have you dealt with in the past?