As we get older, many things in our lives begin to change. Some of us get married, have babies or even decide to pursue a different career. When these events occur, taxes are probably the last thing on your mind. However, if your life looks even a little different than it did last year, it’s a good idea to review your taxes. By examining a few key areas, you’ll be able to avoid an unpleasant tax-time surprise.
Review your tax withholding
Believe it or not, some people don’t like getting a refund at tax time. Why? Because not only did they give Uncle Sam a tax-free loan, they missed out on the opportunity to bring home a bigger paycheck throughout the year. On the other hand, more withholding and less take home pay is the same as enforced savings…and you can decide what to do with that savings when you get your refund! Whatever your preference, use a withholding calculator to see if you’re on the right track. If changes need to be made, complete and submit a new Form W-4, Employee’s Withholding Allowance Certificate to your employer.
Pay your estimated taxes
One way or another Uncle Sam is going to get his fair share. In most cases, having taxes withheld from your paycheck will suffice. However, if you are self-employed and expect to have a tax bill of at least $1,000, you’ll need to make estimated tax payments. For tax year 2020, these payments are due on July 15th, September 15th and January 15th (next year).
Update the Marketplace
Are you receiving coverage through the Health Insurance Marketplace? If so, chances are you chose to receive advance payments of the premium tax credit to lower your monthly premiums. In order to receive the appropriate amount of financial assistance, you’re required to inform the Marketplace any time you experience a life change. Changes that must be reported include getting married, moving or losing your job. Failing to keep the Marketplace up to date has repercussions. If you receive more assistance than your income allows, you’ll either get a smaller refund or have a balance due at tax time. ezTaxReturn supports the premium tax credit and can easily calculate your refund or balance due when you file with us.
