Milwaukee Tax Preparer Tax Tip
Check Your Withholdings
Most people have taxes withheld from each paycheck or pay taxes on a
quarterly basis through estimated tax payments. But each year millions
of American workers have far more taxes withheld from their pay than is
required. In fact, the average refund for 2011 was just under $3,000.
Although it's a slight decrease from 2010, ($2,973 vs. $3,003),
taxpayers might want to consider adjusting their tax withholding to
bring the taxes they must pay closer to what they actually owe--and put
more money in their pocket right now.
On the flip side, is that some workers and retirees still need to
take steps to make sure enough tax is being taken out of their checks to
avoid penalties they might have to pay. Certain folks should pay
particular attention to their withholding. These include:
- Married couples with two incomes
- Individuals with multiple jobs
- Dependents
- Some Social Security recipients who work
- Workers who do not have valid Social Security numbers
- Retirees who receive pension payments
Whether you're starting a new job, retiring, or self-employed, you
can use the following tips to help bring the taxes you pay during the
year closer to what you will actually owe when you file your tax return.
Employees
-
New Job. When you start a new job your employer will ask you to
complete Form W-4, Employee's Withholding Allowance Certificate. Your
employer will use this form to figure the amount of federal income tax
to withhold from your paychecks. Be sure to complete the Form W-4
accurately.
-
Life Event. You may want to change your Form W-4 when certain
life events happen to you during the year. Examples of events in your
life that can change the amount of taxes you owe include a change in
your marital status, the birth of a child, getting or losing a job, and
purchasing a home. Keep your Form W-4 up-to-date.
You typically can submit a new Form W-4 anytime that you wish to
change the number of your withholding allowances. However, if your life
event results in the need to decrease your withholding allowances or
changes your marital status from married to single; you must give your
employer a new Form W-4 within 10 days of that life event.
Self-Employed
- Form 1040-ES. If you are self-employed and expect to owe a
thousand dollars or more in taxes for the year, then you normally must
make estimated tax payments to pay your income tax, Social Security and
Medicare taxes. You can use the worksheet in Form 1040-ES, Estimated Tax
for Individuals, to find out if you are required to pay estimated tax
on a quarterly basis. Remember to make estimated payments to avoid owing
taxes at tax time.
If you're not sure how much you need to withhold from your paycheck, just give us a call and we'll figure it out with you.
We at Small Business Accounting Solutions LLC, work closely with small business owners in Milwaukee, Waukesha, Racine and Washington counties. As a "one-stop-shop", we provide our clients with complete Accounting services, Business and Individual Income Tax preparation, Payroll services, Quickbooks training and more!
1025 S Moorland Road Suite 500
Brookfield, WI 53005
Phone: (262)547-6000
