Virtual CFO Services-Even
though only a few days remain in 2014, you still have time to act so you
aren’t surprised at tax-time next year. You should take steps now to avoid
owing more taxes or getting a larger refund than you expect. Here are some actions you can take to bring
the taxes you pay in advance closer to what you’ll owe when you file your tax
return:
Adjust your withholding. If you’re an employee and you think that your
tax withholding will fall short of your total 2014 tax liability, you may be
able to 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. You usually can have less tax withheld by increasing your withholding
allowances on line 5. Use the IRS Withholding Calculator tool on IRS.gov to
help you fill out the 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. You may need to change the taxes you pay when
certain life events take place. A change in your marital status or the birth of
a child can change the amount of taxes you owe. When they happen you can submit
a new Form W–4 at work or change your estimated tax payment.
Be accurate on your W-4. 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.
Pay estimated tax if required. 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. Use Form 1040-ES, Estimated Tax for
Individuals, to figure and pay the tax.
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