The beginning of the new year marks the time when business owners start accounting for their final total revenue made from sales and expenses incurred while running their business to know how much they have earned in profit. They can already start filing tax returns with the Internal Revenue Service (IRS.)
Employees of a majority of firms located throughout the U.S. receive the IRS Form W-2 from their employer that is required to file personal income tax. This form contains information about an employee’s gross earnings and the deducted amounts for income tax and social security. The form is commonly submitted during late January and early February.
Tax filing can be done immediately after your receive your W-2. The start date for tax season is January 1st, which is the earliest day a tax can be reasonably filed. Early birds file in January and February and by March people are rushing to get their taxes filed before the deadline. Taxpayers can expect to receive a refund once taxes have been filed. If they have not paid their tax bill already, the IRS will send a notice indicating the amount to be paid.
April 15, 2017 is deadline for filing taxes in the U.S.
People who only receive the W-2 may file their returns immediately after receiving their forms while others may need to hand in records of profits or income from investments, real estate and small businesses. The best time to file taxes is as soon as all the necessary documents are available. Receiving reimbursements and paying tax debts in the quickest possible amount of time is advisable. Getting informed about accruing debts well ahead of time is also always beneficial.
A lot of individuals who file their tax returns use agencies that offer loans on tax refunds. The annual percentage rates (APRs) of interest for these loans are quite flexible. As the IRS is also highly flexible, individuals are presented with the option of either receiving a significant portion of their refund immediately or all of it at once after a few months. In a few cases, people can benefit more when receiving most of their refund right away instead of receiving it all at once a few months later. Due to the convenience and flexibility offered by tax refund loans, many people have made use of it.
Multiple Sources of Income
Individuals working at a job or who have other sources of income are subject to their taxes being withheld. Most often, the government does not trust you when it comes to paying taxes all at once at the end of the year, which is why they take it at the source. Due to this very reason, taxes are withheld from our paychecks. Depending on the case, different types of taxes withheld from people’s income are covered under a pension or investment plan.
Taxes might need to get paid at the end of the year if an incorrect amount of tax is withheld from the salary or other source of income. Based on the salary of employees, employers make the necessary tax deductions. There is a chance that not enough tax will get deducted by the employer in the case that a person has more than one employer, and both employers are not aware. The government will find out about this issue at the year’s end and send a notice to the taxpayer stating that the taxes must be paid in full. Hence paying the IRS right away is considered best practice.
For taxpayers concerned with clearing their taxes at the end of the year if they have more than a single source of income, it is highly suggested that they let their employers know about their situation so that their employers can appropriately adjust their tax withholdings.
As a matter of fact, spreading income across two employers and freeing up some cash with a lower withholding tax rate can make things easier for those who can afford to make their tax payments. The option of reducing the amount of tax withheld from paychecks is offered by pre-tax contribution to the 401(k) plan. You will be able to better surf through tax season if you reduce your obligatory tax amount and consult a tax professional if there’s ever any concern.
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