There is nothing worse than getting your taxes done and finding out that you owe Uncle Sam. You are scratching your head trying to figure out why, when you got a refund last year, and honestly you have already spent the money that you thought you were going to get. There are a couple of reasons why you would what to get a Tax Analysis from your Tax Preparer or Accountant: If you had a change in your tax situation, if you owed last year, and if you are self-employed.
If you had a change in your tax situation
The different tax situations that will change your refund status are:
- Different Job – you will either be making more money or less. Either way, it may put you into a different tax bracket.
- Change in Marital Status – Either getting married or divorce will change not only your Standard Deduction but it will also change your tax rate of your taxable income.
- Purchase or Sell of a House – If you buy a new home, you may be eligible to file a Schedule A and itemized your deductions, including but not limited to. (Mortgage Interest, Property Taxes, Charitable donations, and Medical expenses)
- Sell Stocks – If you sell stocks you have to pay taxes on the net income of sale.
- Withdrawing money out of your Retirement Account – This one will get your double taxed. If you are under the retirement age not only will you have to pay taxes on what you withdrew, but you will also be hit with an early withdrawal penalty.
- Addition to your family (new child) – Having a child is always a fun experience (trust me, I have 3 of my own), but it will also get an additional Exemption credit and possibly a Child Tax Credit.
- Your child turned 17 – When your child turns 17, you no longer qualify for the Child Tax Credit. Now don’t worry you still get the Exemption credit.
- And there are many more examples that can change your refund status
If you owed last year
If you owed last year and didn’t change your W4, then odds are you will owe again. Get the Tax Analysis and find out what you should be claiming on your W4.
If you are self-employed.
Being self-employed can be a very rewarding job. I know, I have been self-employed since 2007. But, it does come with being double taxed. You are taxed on your Net Income, as well as having to pay a self-employment tax on your Net Income, this goes into your Social Security and Medicare account.
Well, that was a lot of information! What will a Tax Analysis do for me? It will tell you one of two things. 1. If you need to change your W4 and have more taxes taken out or pay a Quarterly Tax Payment. 2. If you need to change your W4 and have less taxes taken out and have more money in your paycheck and in your pocket. I mean, why would you want to give Uncle Sam more than you need to.
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