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Don’t Rely on Luck at Tax Time 3/12/2021

Don’t Rely on Luck at Tax TimeIs tax time a big mystery to you? Do you cross your fingers and hope the calculations come out in your favor? If you do a bit of prep work for tax time, you won’t have to hope you get lucky—you’ll have a good idea of how much you’ll get refunded or have to pay.

Review your withholdings

If you're employed, at some point you used form W-4 to tell your employer how much tax to withhold from your paycheck. When filling out a W-4, the more allowances you claim, the bigger your paycheck will be, since fewer taxes are deducted. But what you don’t pay during the year, you’ll owe when you file your tax returns.

Contrarily, if you have too much tax withheld, you’ll get a refund— without interest—at tax time.

The IRS website has a withholding calculator you can use to make sure you’re on the right path. If you decide you want to make changes, complete and submit a new W-4 to your employer.

Pay your estimated taxes

If you expect to owe more than $1,000 in taxes, you might need to pay estimated taxes four times a year, usually the 15th of January, April, June, and September. Be sure to save money for those payments. If you don’t make those payments, you could face penalties.

Affordable Care Act and the Premium Tax Credit

The federal tax penalty in the Affordable Care Act for not having health insurance was eliminated in 2019. However, some states have their own requirements for health insurance. If you purchased your own health insurance plan from the Marketplace and are receiving advance payments of premiums, you must keep the Marketplace updated with life changes that would affect those payments. If the Marketplace decides you are receiving more assistance than needed, you will have to pay it back when you file your tax return.

At tax time, there’s no such thing as luck. As your circumstances and tax rules change, review and tweak your tax situation. Plan ahead, talk with your tax adviser and prevent surprises on your next tax return.

Help and resources are available at irs.gov.

The fastest way to receive your tax return is to opt for direct deposit into a checking or savings account. Also, the government has finalized plans for a new round of stimulus payments. Avoid any delays in receiving your payments by opening an account with First South Financial today!

We have no barriers to opening an account with us, and the process only takes a few minutes!

Learn more about opening a Bank@nywhere account, your best option for fast access to your tax return, stimulus payments and more.

 



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