We are already halfway through 2022 – time flies! As shared across our website and with each and every one of our clients – ensuring that you are up to date with filing and payment obligations is crucial when resolving a back tax matter. The IRS requires that you be able to file and pay your taxes on time moving forward before considering any resolution request for outstanding balances owed. It is always a challenge when a taxpayer opts to wait until the end of the year to tackle this – chances are, if you wait until December or January, you may be surprised and unprepared for the amounts owed and it may be tough to come up with the funds needed to cover that tax bill. That’s why we’re giving you this mid-year reminder – it’s time to perform a MID-YEAR TAX CHECK-IN.
A little bit of planning now can make tax time less stressful and if you are attempting to resolve on overdue tax debt, make your chances of success much greater.
If you’re a self-employed individual, take some time to clean up your books year-to-date. Keep a running accounting of your income, business expenses, etc. If you’re struggling to keep up with this bookkeeping or don’t know where to start, start the search for a qualified professional who can assist you. Getting someone onboard now to clean up your invoices, receipts, etc. and take over moving forward will be less stressful and more cost-effective than waiting until years-end.
Once your records are up to date, calculate your year-to-date estimated tax payment obligation using your profits and losses thus far. You can calculate your Estimated Tax Payments with the IRS’ Form 1040-ES. You’ll calculate your expected adjusted gross income, taxable income, taxes, deductions, and credits. Be sure you catch up on your Estimated Tax Payments now and keep up for the remainder of the year so when you file next year’s tax return, you don’t owe a large balance and face penalties and bigger tax issues.
The easiest way to remit Estimated Tax Payments is via the IRS’ EFTPS (Electronic Federal Tax Payment System). You can also mail payments, pay by phone, pay online at IRS.gov/payments, or pay from the IRS2Go app on your mobile device.
If you’re a W-2 employee and have taxes withheld from your paycheck, now is a great time to take a look at the W-4 form you completed with your employer re: withholdings. If you’ve had any major life changes or if your income has changed drastically, adjustments may need to be made.
In addition to ensuring that you are on target to file and pay your taxes timely, a mid-year tax planning session with a tax professional is also always recommended. Are you missing out on tax-deductible business expenses? Tax-deferred contributions? Between two tax brackets? Waiting until tax season rolls around typically makes these types of tax planning efforts too late, so the time to explore those is now.
Need help? Bryson Law Firm, LLC is here for you! Contact our office today.