3 Top Reasons for Tax Trouble and How to Fix Them for Next Year (Part 1 of 3)
3 Top Reasons for Tax Trouble and How to Fix Them for Next Year
(Part 1 of 3)
#1 - UNDER WITHHOLDING
This means you did not have enough money taken out of your check this year to cover the taxes that will be due.
🙁 Sadly…you will owe.
🙂 Don’t worry...we can get you back on track.
Top Reasons why you might “under withhold” and how it was done?
WHY? You needed more money each pay period. If you were running short each pay period, you looked for ways to increase your take home pay. HOW? You contacted payroll or human resources to change your W4 to reduce the taxes taken out of your check. Some Clients will do this early in the year planning to correct it in a few months when they “get caught up”. Then they either forget to change it back, or they continue to struggle and need the extra income. RESULT? It might have seemed like a good idea to adjust (decrease) your tax withholding so that your pay check would be bigger. This strategy worked to allow you to have more money each pay period to pay your bills. The problem now is that you owe taxes and have a new bill for next year. WHAT DO YOU DO? First – you should schedule an appointment so that I can review your situation. If your taxes have not been prepared, I can prepare them for you. If they have already been prepared, we’ll make sure that you don’t have this same problem when you are ready to file next year. We will figure out how to correct your withholding amount. For all of my clients who owe taxes, part of the analysis is to discuss why you owed in the first place. Then we discuss what to do to deal with the tax bill. After that, we discuss strategies to avoid owing in the future.
WHY? Mistake. HOW? You may have started a new full-time job and filled out the forms incorrectly. You may have started a part-time job and not realized how the calculation of tax to withhold is based on knowing how much you make in total on ALL jobs and not just a single job. The tax issues created by the part-time job will be covered in Part 2. You may have taken a distribution from your retirement account. The tax issues created by doing this will be covered in Part 3. RESULT? Without knowing it – a tax problem was quietly being created each time you got paid. WHAT DO YOU DO? First – you should schedule an appointment so that I can review your situation. If your taxes have not been prepared, I can prepare them for you. If they have already been prepared, we’ll make sure that you don’t have this same problem when you are ready to file next year. We will figure out how to correct your withholding amount. For all of my clients who owe taxes, part of the analysis is to discuss why you owed in the first place. Then we discuss what to do to deal with the tax bill. After that, we discuss strategies to avoid owing in the future.
WHY? Bad advice. HOW? You may have listened to your friends or relatives who told you all sorts of stories about how they changed their withholding and it worked out just fine. RESULT? What these well meaning friends and relatives didn’t take into consideration is that every person is different. The taxes you owe will be based on your own unique set of circumstances (filing status, dependents, deductions, itemizing, earned income credit, etc.) WHAT DO YOU DO? First – you should schedule an appointment so that I can review your situation. If your taxes have not been prepared, I can prepare them for you. If they have already been prepared, we’ll make sure that you don’t have this same problem when you are ready to file next year. We will figure out how to correct your withholding amount. For all of my clients who owe taxes, part of the analysis is to discuss why you owed in the first place. Then we discuss what to do to deal with the tax bill. After that, we discuss strategies to avoid owing in the future.
Since 1997, the St. Louis attorneys at The Law Office of Tracy A. Brown, P.C., have helped hundreds in Saint Louis stop creditors from harassing, garnishing, and threatening clients through Chapter 7 and Chapter 13 bankruptcy filings that alleviate excessive debt. Contact us today to free your future from your past.
