What I Did On My Summer Vacation

The Obligatory Time Square Selfie

I spent the summer enjoying my family and crossing something off of my bucket list. My daughter and I were able to visit New York City and see The Prom on Broadway before it closed in August. We had a great time and are already planning our return trip. At home we are finishing up building a new shed; our first big home improvement project at the new house.

Meanwhile, the IRS has been hard at work. They put out 68 news bulletins over the course of the summer! These bulletins range in topic from registration information for the annual National Tax Forums to relief for those who have been affected by hurricane Dorian. Mixed in with guidance for tax preparers on handling certain aspects of the new tax code, there are 8 different notices regarding safe guarding your information and current tax scams that have been reported to the IRS.

While most of these notices are geared toward tax professionals, there is one that lists some tax tips to consider while going about your summer plans. Some of these tips include changing your name and address after the wedding, what summer camps qualify for child care credits, and a reminder to report those gambling winnings from that day you were escaping the heat on vacation. The final tip listed is to check your withholding.

I know I sound like a broken record, but I really do hate having to sit across from a client and surprise them with a tax return result. At least I have company in the broken record department, the IRS Newsroom has a total of 11 different notices with a headline encouraging all to check their withholding.

On August 6th, the IRS launched a new Tax Withholding Estimator that was redesigned to simplify the process of estimating your 2019 tax liability and what your withholding should be. This redesign requires you to have your most recent paycheck stub, the amount of any and all tax credits you will be eligible to take, a list of adjustments to income, and finally a crystal ball.

Your crystal ball will come in handy when you are answering questions like, do you expect to keep this job for the rest of the year? Do you have any other types of income? How much do you expect to make in total by the end of the year? While all of these questions do factor into your tax picture, it can be daunting to try to consider every possibility all at once. This is one of the reasons that I recommend checking your withholding at least once per year, and if you are unsure or something changes in your situation, check again before the end of the year.

On January 1st, there is nothing that can be done to correct under-withholding.  

My Free Advice this Friday: Check your withholding! If the Tax Withholding Estimator is too cumbersome, please call me and we can work through the numbers to ensure there are no tax season surprises.

Check back next week for tips on how to get ready for tax season, even if it seems a bit too early.                                              

Tagged , , , , , , , , , ,

Leave a Reply

Your email address will not be published. Required fields are marked *