Taxes, in general, are a complicated issue. With the laws changing yearly and different regulations impacting your financial status, understanding all of the intricacies associated with every possible tax situation is better left to the professionals. However, a general idea of some basic factors which could have an immediate impact on your filing status come tax season are important. One of those revolves around starting a new job or other significant life event - marriage, child, etc.
These factors all affect an individual’s tax situation and knowing how many allowances to file for may determine if you either receive a refund or owe money at the end of a year. Determining this begins by understanding your current withholdings.
This is the amount of money an employer takes from an individual’s paycheck in order to account for their portion of taxes, allowing for the required payments to be extracted over time as opposed to one full payment paid at the end of a year.
The federal form required to be filled out by employees used to notify employers how much money is to be withheld. Often, you will hear the question, “Should I claim 0 or 1 on my taxes?” - these are the allowances available to individuals and have an impact on the amount of money being taken away from a paycheck. No allowances means the employer with remove the largest amount required, while additional allowances minimize the money being removed now but could result in a person owing when their yearly taxes are filed.
These are the factors that make an individual exempt from certain taxes. For a better understanding, the Internal Revenue Service (IRS) provides a worksheet with the W-4 form in an effort to allow people an opportunity to make their own determination. Ultimately, the number of allowances you submit will have a result on your tax situation and both extremes include their own pros and cons.
Withholding too few allowances increases the likelihood of a refund during tax season but results in a smaller paycheck throughout the year. Opposite, too many allowances may provide for a larger paycheck now but could result in money being owed at the end of a year, in addition to potential penalties depending on the amount and results of your tax return filing.
The tax and financial experts in Denver
at Bloch Rothman and Associates are ready and willing to assist if you have questions regarding your current W-4 status, paying all currently required taxes, owed back taxes, or any other personal or corporate wealth management issues. In addition to providing a quality tax service, including navigating the intricacies of an audit, our group can also complete tax returns or answer any other factors associated with financial 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!