Act Now to Avoid Tax Surprises Later

As 2014 winds down, there is still time to act so you aren’t surprised at tax-time next year.  There are a few steps you can take to avoid owing more taxes or toward getting a larger refund than you expect.  

Adjust your withholding.  If you’re an employee and you think that your tax withholding will fall short of your total 2014 tax liability, you may be able to avoid an unexpected tax bill by increasing your withholding.  If you are having too much tax withheld, you may get a larger refund than you expect. 

Report changes in circumstances.  If you purchase health insurance coverage through the Health Insurance Marketplace, you may receive advance payments of the premium tax credit in 2014. It is important that you report changes in circumstances to your Marketplace so you get the proper type and amount of premium assistance.  

Change taxes with life events.  You may need to change the taxes you pay when certain life events take place.  A change in your marital status or the birth of a child can change the amount of taxes you owe. 

Be accurate on your W-4.  When you start a new job, you fill out a Form W-4.  It’s important for you to accurately complete the form.  

Pay estimated tax, if required.  If you get income that’s not subject to withholding, you may need to pay estimated tax.  This may include income such as self-employment, interest, or rent. 

For more, see Publication 505, Tax Withholding and Estimated Tax. 

To read the entire article, please visit www.irs.gov.