Are you properly having enough taken out of your paycheck?
Tuesday, October 30, 2018
Here at our site we always encourage you to keep a log and continually monitor it. One of the most effect strategies to see if you’re maintaining your goals is to have a calendar with a monthly, 3-month, yearly, 5 year and 10 year goal. That way if you’re not meeting your daily and monthly goals then you know that something needs to be fixed and changed.
On that note, in your calendar around November and October after tax season has ended in October should not be the time to slack off on your paycheck and tax planning. Far from it. At that time is the best time to double down and plan for the upcoming year for the most advantageous tax strategy so that you can lower your overall tax bill. Here are some judicious tips to ensure you’re getting the most from work and your pay.
– Check up your Federal withholding to make sure you don’t have too many allowances claimed. Basically an allowance is telling your employer that you have more people you’re taking care of and need a bigger paycheck and you’re planning to put them also on your tax return at the end of the year. So the more people or higher numbers means they take out less and if they take out less taxes then they are supposed to then you’re going to end up owing or ponying the tax at a later time. Think of it this way. You have to pay a set amount of tax so you just have to budget it as an expense you have to do any way, like paying for the costs of a license plate it’s a necessary amount that you just have to set aside for.
– If you don’t have any withholding because you’re self-employed or a contractor then you have to make sure you send payments voluntarily because the whole system is supposed to be voluntarily to a point. That is you have to pay it and know you have to pay it but you have leeway on when to pay it up to a point (when it’s due by tax time). So make sure if you are self-employed and don’t take it out that you’re taking enough out or setting aside some out of the money you’ve made as if it was a business operating expense. It’s just one of those things that has to be done to keep your business afloat. These payments are usually done on a Federal schedule that’s quarterly or every three to four months and done with a payment slip or voucher you can get for free from the federal website. You usually have to do this if you anticipate your business will make such a high amount of tax that you will have at least one thousand dollars of taxes.
– Also check to make sure you are compliant at the state and local city tax levels. The smaller entities also impose penalties and fines and interest and some of their offices may send someone out to inquire if you’re not meeting your obligations so this is also a good thing to check up.
– A lot of the official websites which will usually end with a domain of .gov are the ones you should go to to check on services that they provide to check on balances, get account histories and also get instructions and forms and use a paycheck and withholding calculator to do financial and tax planning.
We recommend once a year to pull out your old spreadsheets and receipts and paystubs and do a periodic review to make sure nothing is missed. Even if you have a bookkeeper or CPA it ultimately is your financial health at stake and so it helps to have a few sets of eyes to make sure everything is going smoothly. You can never be too careful.
Now with the constant changes in legislation and forms overhaul and stimuluses and additional healthcare related forms, it’s never been a better time to make sure that you have all your forms organized. So we also recommend to get yourself an organizer to keep all your documents filed and can easily pull back out by year. And if you’re living with people that are less than stellar roommates you might want to put a padlock or have offsite backups in case you have a fire or water damage.
Try to keep records for a reasonable amount of time also should you be required to furnish proof of something because sometimes you need items for taxes, getting identity documents for other government agencies or for applying for certain government benefits.