With 10 million taxpayers a year facing estimated tax penalties, here are some simple tips to help prevent a surprise at tax time.
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People pay taxes on income through withholding on their paycheck or through estimated tax payments. Taxpayers who pay enough tax throughout the year can avoid a large tax bill and penalties when they file their return.
Taxpayers should make estimated tax payments if:
The tax withheld from their income does not cover their tax for the year.
They have income without withholdings. Some examples are interest, dividends, alimony, self-employment income, capital gains, prizes or awards.
Here are five actions taxpayers can take to avoid a large bill and estimated tax penalties when they file their return. They can:
Use Form 1040-ES. Individuals, sole proprietors, partners and S corporation shareholders can use this form to figure estimated tax. This form helps someone calculate their expected income, taxes, deductions and credits for the year. They can then figure their estimated tax payments.
Use the Withholding Calculator on IRS.gov. This tool helps users figure how much money their employer should withhold from their pay so they don’t have too much or too little tax withheld. The results from the calculator can also help them fill out their Form W-4. Taxpayers whose income isn’t paid evenly throughout the year, can check Publication 505 instead of the calculator.
Have more tax withheld. Taxpayers with a regular paycheck can have more tax withheld from it. To do this, they must fill out a new Form W-4 and give it to their employer. This is a good option for taxpayers who participate in a sharing economy activity as a side job or part-time business.
Use estimated payments to pay other taxes. Self-employed individuals can make estimated tax payments to pay both income tax and self-employment tax. Self-employment tax includes Social Security and Medicare.
Use Form W-4P. Generally, pension and annuity plans withhold tax from retirees’ payments. Recipients of these payments can adjust their withholding using Form W-4P and give it to their payer.
GET TAX RELIEF HELP TODAY
If you think that you may need help filing your 2017 tax return, you may want to partner with a reputable tax relief company who can help you get the max refund.
Advance Tax Relief has a offices in Houston, TX and Los Angeles, CA and helps many individuals just like you work with the IRS to solve a wide variety of issues, including penalty waivers. Call our team today at 800-790-8574 for more information. For a free consultation, schedule an appointment with us online.
However, it doesn’t matter where you live, we service taxpayers nationwide.
Advance Tax Relief is a BBB Accredited A+ Rated Business.
Some Recent Tax Settlements:
Mr. Dillard – CA Owed $6884, IRS settled for $400
Mr. Batiste – LA Owed $18513, IRS settled for $2972
Mr. Johnson – CA Owed $21,378, IRS settled for $4500
Ms. Gonzalez – TX Owed $28,816, IRS settled for $1700
Mr. Anthony – NY Owed $14,000, IRS settled for $900
Mr. Wilkes – CA Owed 32,211, IRS settled for $1250
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