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When You Must Consider Adjusting Your Federal Tax Withholdings

Accountants in Utah Do the taxes the government withheld from your paychecks coincide with the taxes that you need to pay off? If not, you could resolve this by adjusting your federal tax withholdings. But when is the best time to do this?

You Got a Huge Tax Return

If you’ve received a huge tax refund from the government for the taxes you paid last year, this means that the government was taking out too much from your paycheck. Although it’s exhilarating to receive that big check, take note that this money belongs to you and the government is simply borrowing it from you without interest. If you had that money when you were supposed to have it, you could’ve put it to good use by paying off debts and household expenses or invested it and made money off it.

You’re Anticipating Significant Life Changes or Events

When something significant in your life happens or changes, your taxes will too. Did you buy a house? Got married or divorced? Had a baby? Started working multiple jobs? Started giving to charity? If you’re anticipating (or already experienced) similar life changes or events, renowned accountants from Utah says that it’s high time to assess your withholdings. These will definitely impact your taxable income.

You Owe the Government Money

Nothing’s worse than expecting a tax return and then finding out that you owe the government money. However, you must discipline yourself and set aside some money from every paycheck to repay the government, especially if you owe a large amount of money.

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Consider raising your withholding so the money goes straight to the government. For instance, if you need to pay off $1,500 and your paycheck arrives every week, consider spreading out the $1,500 over a couple of weeks. Rather than paying the government a lump sum of $1,500, give them at least $25 to $30 every week to ensure that you won’t owe them anything when tax season comes around.

It might seem that you have many opportunities to adjust your federal tax withholdings, but take note that many people could go years without needing to adjust their withholdings. But if any of the above applies to you, it’s in your best interest to file that W-4.

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