According to the IRS, taxpayers who need to pay more before tax time have several options, so be sure to pass along this information to your tax clients.
All employees should make sure their employers are withholding the correct amount of tax from their paychecks. The best way to check withholding is to use the IRS’ Withholding Calculator. They can use the calculator to do a Paycheck Checkup. This lets the employee check to see if their employer is taking enough tax from their paycheck to cover the amount of tax they owe. After using the calculator, if necessary, the employee can make changes. This will help employees avoid an unexpected result at tax time, such as a smaller refund.
Here are three ways that taxpayers can adjust their withholding:
- Changing the withholding allowances on Form W-4. When an employee reduces the number of allowances on their Form W-4, they increase the amount of income tax their employer withholds from their pay. On one hand, this mean a smaller paycheck. On the other hand, the employee is paying more tax upfront. This usually will mean less chance that they employee will see a smaller refund or larger tax bill at tax time.
- Having an extra flat-dollar amount withheld from each paycheck. Employees whose employers are already withholding the least amount of allowances can simply add a specific amount to their withholding. These employees can indicate this amount on a new Form W-4 and submit this to their employer or the payroll department. For example, an employee can tell their employer to withhold an extra $200 per paycheck. This will allow withholding to occur more evenly throughout the year.
- Making estimated tax payments throughout the year. Estimated payments are another way for taxpayers to pay what they owe in separate payments made throughout the year. For tax year 2019, remaining estimated tax payments are due from individual taxpayers on Sept. 16, 2019, and Jan. 15, 2020. The fastest and easiest way to make estimated tax payments is electronically using Direct Pay or the Electronic Federal Tax Payment System.
For more information, direct your clients to the IRS website.