Tax season has come and gone and while some end up owing the federal government taxes, many do receive a refund. Especially with the new tax laws put into effect this filing year, those who have sometimes had to pay in the past may now be receiving money back because of the changes in standard deduction amounts for both individuals and those married filing jointly, in addition to other types of applications.
For those who may be receiving a refund for the first time, finding a good use for the small, albeit sometimes large windfall at an unexpected time can be a difficult task. Many choose to use the money to pay off credit cards, book an exotic vacation, or even pay down the principal on a mortgage but for those who wish to be considered “tax savvy” - another application could be more beneficial.
As recently as 2015, nearly 80-percent of individuals who filed received taxpayer refunds
. This year the number may be slightly lower but there are still an overwhelming majority who pay in too much throughout the course of the year and then receive money back in the spring.
For some taxpayers, it is suggested that they pay estimated taxes
at different points throughout the year to avoid having to come up with a large some of money when taxes are filed, fulfill their annual tax obligation, and avoid any penalties. Especially for those individuals who are considered self-employed, the tax burden can be cumbersome.
Estimates are used to ease this burden, although coming up with first-quarter payments that are due the same time as last year’s taxes (April 15 - during most years) can be a difficult task.
For this reason, it is recommended that those who need to make estimates but are receiving a refund, apply their overpayment toward the next year. For example, if you make quarterly estimated tax payments of $500 ($2,000 annually) and are getting a $250 federal refund - apply this money toward the next due estimate.
Instead of adjusting your due estimates to the previous year’s refund, changing it to $1,750 - applying the money back to an already established norm can benefit all involved parties. The taxpayer fulfills their obligation and instead of having to come up with multiple checks within a relatively short time frame, the anticipated payments are adjusted accordingly.
The tax experts
at Bloch Rothman and Associates are able to assist with completing your tax return or analyzing any other factors associated with issues or concerns you may have. Serving in Denver and all of the surrounding areas for 35 years, our firm has an extensive history in helping clients with any and all of their tax issues or dealings with the Internal Revenue Service. If you have questions about your personal, business, estate or any other filings, don’t hesitate to contact us today. Available for all of your tax needs and filings there are also a number of bookkeeping and payroll services offered to assist you and your business. We look forward to meeting you and serving whatever your needs may be soon!