Now Is the Time To Check Your Federal Tax Withholding - May 2022
Money
Contributed by : Mukesh Makker
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Now that tax season is over, it's time to get the new tax year off to a good start by checking your federal income tax withholding. Taxpayers can do this by using the Tax Withholding Estimator on IRS.gov. Let's take a look at why using this valuable online tool is a good idea:
The Tax Withholding Estimator helps employees avoid having too much or too little tax withheld from their wages. It is also useful for self-employed individuals who have wage income or estimated tax payments that they need to make to avoid unexpected tax bills when filing their annual returns. Having too little withheld can result in a tax bill or even a penalty at tax time; having too much withheld results in less money in their pocket. In other words, the estimator can be used to help taxpayers get to a balance of zero or a desired refund amount.
The Tax Withholding Estimator also helps taxpayers figure out whether they need to complete a new Form W-4, Employee's Withholding Allowance Certificate and submit it to their employer or make an additional or estimated tax payment to the IRS.
How it Works
The Tax Withholding Estimator asks taxpayers to estimate:
Their 2022 income.
The number of children they will claim for the child tax credit and earned income tax credit.
Other items that will affect their 2022 tax return when they file in 2023.
The online tool does not ask for personally identifiable information, such as a name, Social Security number, address, and bank account numbers. The IRS doesn't save or record the information entered in the Estimator.
Gather Tax Documents
Before using the Estimator, it can be helpful for taxpayers to gather applicable income documents, including:
Their pay stubs
Forms W-2, Wage and Tax Statement , from employers to estimate their annual income
Forms 1099 from banks, issuing agencies and other payers including unemployment
compensation, dividends, distributions from a pension, annuity or retirement plan
Form 1099-K, 1099-MISC, W-2, or other income statement for workers in the gig economy
Form 1099-INT for interest received
Other income documents and records of virtual currency transactions
These documents are not needed to use the estimator but having them handy will help taxpayers estimate 2022 income and answer other questions asked during the process.
Taxpayers should be aware that the results of the Tax Withholding Estimator will only be as accurate as the information entered by the taxpayer. It should also be noted that individuals with only pension income should not use the Estimator. Those with wage income can account for current or future pension income. People with more complex tax situations, including those who owe alternative minimum tax or certain other taxes and people with long-term capital gains or qualified dividends, are advised to consult with a tax professional.
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How To Check the Status of a Tax Refund
Tracking the status of a tax refund is easy with the Where's My Refund? tool. It's available anytime on IRS.gov or through the IRS2Go App. Where's My Refund provides a personalized date after the return is processed and a refund is approved. While most tax refunds are issued within 21 days, some may take longer if the return requires additional review.
There are a few reasons a tax refund may take longer such as:
The return may include errors or be incomplete.
The return could be affected by identity theft or fraud.
Many banks do not process payments on weekends or holidays.
If more information is needed to process a taxpayer's return, the IRS will contact taxpayers by mail. It is important to note that calling the IRS won't speed up a tax refund. The information available on Where's My Refund? is the same information available to IRS phone assistors.
Taxpayers who claimed the earned income tax credit or the additional child tax credit, can expect to get their refund March 1 if:
They file their return online
They choose to get their refund by direct deposit
The IRS found no issues with their return
Fast and easy refund updates
The Where's My Refund tool provides a personalized date after the return is processed and a refund is approved. Taxpayers can start checking on the status of their return within 24 hours after the IRS acknowledges receipt of an electronically filed return or four weeks after the taxpayer mails a paper return. The tool's tracker displays progress in three phases:
Return received
Refund approved
Refund sent
To use the Where's My Refund? tool, taxpayers must enter their Social Security number or Individual Taxpayer Identification Number, their filing status, and the exact whole dollar amount of their refund. The IRS updates the tool once a day, usually overnight, so there's no need to check more often.
| About Author |
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Mr. Maker is a certified Public Accountant and serving the South Asian community since 1993.
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Website: https://taxprofessionalsnw.com/newsletter.php#7
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