Tax Insight–December 2015
Important Tax Reminders
- Fourth quarter 2015 individual estimated tax payments are due on January 15, 2016.
- Starting in mid-January, tax forms, including W-2s and Form 1099s, begin to arrive in your mailbox. Store them in a safe place for your tax season appointment.
Tax Withholding From Income You Receive
Income you earned in 2015 will be reported on your tax return, and the amount of tax withheld will determine your refund or the amount you may owe.
In addition to wages, tax is often withheld from other types of income, such as pensions, bonuses, commissions and gambling winnings. Ideally, you should try to match your withholding with your actual tax liability. If not enough tax is withheld, you will owe tax at the end of the year and may have to pay interest and a penalty. If too much tax is withheld throughout the year, you’ll lose the ability to use that money until you receive a refund.
Typically, when preparing your taxes each year, I make sure your withholding makes sense for your tax situation; however, if you know you’ll have a significant amount of additional income or any life changes that may affect your income, please contact me as soon as possible. Getting married or divorced, having a child or buying a home are considered life changes.
If you have one of these life changes, you may need to give your employer a new Form W-4, Employee’s Withholding Allowance Certificate, to change your withholding status or number of allowances. Generally, taxpayers should give their employer a new Form W–4 within ten days after either:
- A divorce, if they have been claiming married status, or
- Any event that decreases the number of withholding allowances they can claim (e.g., child graduates from college).
Also, if you bought insurance coverage in 2015 through the Health Insurance Marketplace, you should report changes in circumstances to the Marketplace when they happen. Reporting changes in income or family size will help taxpayers avoid getting too much or too little advance payment of the premium tax credit.
“It’s not the money that matters. It’s how you use it that determines its true value.” ~ Unknown
Did You Know?
A standard flathead screw can be tightened with a dime because the width is just right.