As we approach the end of 2023, we suggest reviewing your 2024 Federal and State withholding to prevent any surprises when filing. It’s optimal to verify withholding early in the year to mitigate unexpected outcomes, such as substantial refunds or balances due.
- Act Now: We suggest taking a proactive approach to checking your withholding to make any necessary adjustments. The Federal Tax Withholding Estimatorassists taxpayers in evaluating their income tax withholdings, plus provides guidance on adjusting withholding to avoid surprises upon filing returns. While employers typically withhold income tax from wages, taxpayers with higher wages can be under-withheld, leading to balances due that were not expected.
- Pay-As-You-Go Options: Individuals with income NOT subject to withholding (e.g., investment income, rental income, side hustle earnings) should consider making quarterly estimated tax payments to avoid potential balances due or underpayment penalties. Taxpayers can submit estimated tax payments to federal and state governments using payment vouchers by mail or online. Taxpayers can conveniently manage payments, view payment histories, and access other Federal tax records at IRS.gov/account; many States have similar capabilities.
- Life Events and Adjustments: Common life events like marriage, childbirth, job loss, or disasters can impact tax situations. Taxpayers experiencing these events should consider adjusting their withholding accordingly.
- Refund Not Guaranteed: We emphasize that a tax refund is not guaranteed. Therefore, proper withholding adjustments and addressing the necessity of estimated tax payments can adjust take-home pay and help you avoid surprises upon the filing of your Federal and State tax returns.
We are here to assist you in determining the best withholding and payment options. If you have any questions or require assistance, please contact your tax advisor.
