It may need to be adjusted due to the 2017 federal tax reforms.
The Internal Revenue Service has a message for you. You may need to adjust the amount withheld from your paycheck or the size of your estimated tax payments because the agency is using new withholding tables this year. Should you underpay your taxes for 2018, you could be hit with a tax penalty in 2019
If you are retired or about to retire, you should take note of this announcement. While it may seem aimed at salaried employees and small business owners, the changes to the withholding tables also impact you.
Many retirees work in the gig economy. They walk dogs, drive for ridesharing companies, serve as home health aides, and act as management, marketing, legal, and
If you have started freelancing or started a part-time business, you must join their ranks. You must file like a business owner even if you have an informal business venture that has lost money; if there is a profit motive, the I.R.S. considers that self-employment
Double-check your withholding even if you do not work
Part of your Social Security income can be subject to federal income taxes if your “combined income” exceeds a certain level. “Combined income” = adjusted gross income +
Given all this, Form W-4V may be handy. You can file it to withhold aflat percentage from each Social Security payment: 7%, 10%, 12%, or even 22%.(4,5)
Do you receive a pension or pension-style income? Then you may want to file Form W-4P, which withholds taxes from those payments (you can indicate the number of allowances you wish to claim; the more you claim, the less money you withhold)
Regarding the Required Minimum Distributions (RMDs) you must take annually from traditional IRAs and other qualified retirement accounts after age 70½, you have an interesting option if you are wealthy enough not to need 100% of the money. You can tell the custodian of your IRA (or
To help with all this, the I.R.S. offers an online withholding calculator. This is a feature of its Paycheck Checkup campaign. You can find it at irs.gov/individuals/irs-withholding-calculator.(1)
Be sure to consult a tax professional about your withholding.
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.
1 - irs.gov/newsroom/avoid-penalty-for-underpayment-of-taxes-irs-says-check-withholding-make-estimated-payments [9/6/18]
2 - irs.gov/businesses/small-businesses-self-employed/self-employed-individuals-tax-center [12/14/17]
3 - irs.gov/businesses/small-businesses-self-employed/business-activities [4/23/18]
4 - cnbc.com/2018/09/12/the-
5 - kiplinger.com/article/retirement/T051-C000-S004-retiree-tax-tip-tally-taxes-on-social-security.html [9/5/18]