Adjusting Your Tax Withholdings
It’s a good idea to double check your tax withholdings. Sometimes you’re paying in too much. Other times, you’re not withholding enough and you could be left with a substantial tax bill at the end of the year. Therefore, now is a good time of the year for adjusting your tax withholdings.
The IRS wants to make adjusting your tax withholdings easier. Thus, they have an easy-to-use tax withholding calculator. If you are self-employed in your business, I’d suggest using this calculator. If you discover that adjusting your tax withholdings is necessary, complete a new form W-4 and keep it on file with your employment records. Moreover, your payroll company will need this information from you too. Payroll errors are common with small business owners, but the IRS does not excuse you merely because you’re a small business entity. Therefore, getting expert advice from your tax professional is a must-do thing for small business owners to stay compliant.
What do you need to re-calculate your tax withholdings
The calculator will ask you for estimates of 2019 income, the number of children you expect to claim in 2020 and other items that could affect your 2020taxes. It’s a fairly quick process. However, you can speed up things if you have these items on hand:
- Your most recent pay stub
- Your most recent income tax return (a copy of your completed Form 1040)
Remember, adjusting your withholdings will not affect your 2019 tax year nor your required tax return due date in 2021. However, this tool will prevent you from creating issues in 2020 and with your 2020 tax return. Submitting honest & accurate information within this tool is essential. The calculator delivery will only be as precise as the information you provide. Moreover, if you expect a change during the year, like the birth of a child, come back to this calculator and make edits by adjusting your tax withholding again. The calculator does not ask for personal information, and more importantly, it does not record the data entered.
Important Answers Are Not One-Size-Fits-All
Paragon Accounting & Tax Solutions is the Reader’s Choice Award winners for BEST ACCOUNTING in Woodstock, GA for 2017, 2018 & 2019. Our services are here to guide you to save the most in taxes. However, if you suspect that you have a “more complicated” circumstance with your payroll and adjusting your tax withholding is not “straightforward”, contact our office. Our payroll specialists can determine the best course of action for you to stay compliant when adjusting your tax withholdings.