Review Your Taxes This Summer to Prevent a Surprise Next Spring

Many people receive a larger amount of refund than they expected each year.  Some, however, find they owe a lot more income tax than they thought they would. If this happened to you, you may want to review your situation to prevent another year tax surprise. Some life event changes such as marriage have a child; have a change in income can have a major effect on your taxes.   Below are some key tips to help you come up with a plan of action:

• New Job.   When you start a new job, you must fill out a new  Form W-4, Employee's Withholding Allowance Certificate, to update your withholding information and give it to your new employer. Your employer will then use the form to figure the amount of federal income tax to withhold from your pay.  
• Estimated Tax.  If you have some earned income that is not subject to withholding,  you may need to pay estimated tax. This may include income such as self-employment, interest, dividends or rent. If you expect to owe a thousand of dollars or more in tax, you may need to pay this estimated tax. You normally pay it four times a year.  You can use the worksheet in Form 1040-ES, Estimated Tax for Individuals, to figure the tax that you need to pay.
• Life Events.  Check to see if you need to make any change on your Form W-4 or change the amount of estimated tax you need to pay when you have certain life events take place. A change in your marital status, the birth of a child or buying a new home can change the amount of income taxes you owe. In most cases, you can submit a new Form W–4 to your employer anytime. 
  
• Changes in Circumstances.   If you are receiving advance payments of the premium tax credit, it is very important that you report any changes in circumstances, such as changes in your income or family size, to your Health Insurance Marketplace. You should also notify the Marketplace when you move out of the area covered by your current Marketplace plan. Advance payments of the premium tax credit will help you pay for the health insurance that you buy through the Health Insurance Marketplace. Reporting changes to Marketplace will help you get the proper type of health insurance and proper amount of financial assistance so you can avoid getting too much or too little in advance.

        If you have any questions, please feel free to email us.

    Your comments and feed backs are always welcome.

                              Source:  www.irs.gov.

                             Email:   Excellent-tax@gmx.com