Prepare for the Tax Season to Avoid Complications

Posted on February 21, 2024

Prepare for the Tax Season to Avoid Complications

The upcoming tax season is still a couple of months away, but the end of the year is the right time to make your preparations. In these next two months, you can make adjustments to your taxes for this year to increase your savings.  Also, there are important tax changes brought about by the Affordable Care Act, also known as Obamacare, which you must be current with. To file taxes on time, or preferably as early as possible, you can plan and prepare for the tax season well in advance. CapeGazette shares the important tax considerations that will help you file your return smoothly in 2015.

“Adjust withholding.  An employee who thinks that his/her tax withholding will fall short of the total 2014 tax liability may be able to avoid an unexpected tax bill by increasing their withholding. Too much tax withheld may mean a larger refund than expected. In either case, complete a new Form W-4, or Employee’s Withholding Allowance Certificate and give it to your employer. Enter the added amount to be withheld from each paycheck until the end of the year on Line 6 of the W-4 form. Taxpayers also have the option to have less tax withheld by increasing withholding allowances on line 5. Use the IRS Withholding Calculator tool on to help fill out the form.

“Report changes in circumstances.  Taxpayers who purchase health insurance coverage through the Health Insurance Marketplace may receive advance payments of the premium tax credit in 2014. It is important to report changes in circumstances to the Marketplace to get the proper type and amount of premium assistance. Some of the changes that should be reported include changes in income, employment, or family size. Reporting changes will help the taxpayer avoid getting too much or too little premium assistance in advance.

“Change taxes with life events.  Taxpayers may need to change the taxes they pay when certain life events take place. A change in marital status or the birth of a child can change the amount of taxes owed. When these events occur, you must submit a new Form W-4 at work or change the amount of estimated tax payments.

“Be accurate on your W-4. When a taxpayer starts a new job, he or she fills out a Form W-4. It’s important to accurately complete the form. For example, special rules apply if the taxpayer works two jobs or claims tax credits on his/her tax return. The employer will use the form to determine the amount of federal income tax to be withheld.

“Pay estimated tax if required. If the taxpayer receives income that’s not subject to withholding, he/she may need to pay an estimated tax. This may include income such as self-employment, interest, or rent. You also may also have to pay estimated tax if the amount of income tax that is withheld from your salary or pension is not sufficient. The tax is normally paid four times a year. Use Form 1040-ES, Estimated Tax for Individuals, to figure and pay the tax.