Many don't think about paying taxes in the summer, but maybe they should. What you do now could affect what you owe next year. Are you withholding enough or too much? IRS Tax Tip 2019-112 provides various reasons not to wait until April for a paycheck checkup.
Here's what you need to know, quoting from Tax Tip 2019-112:
"Year-round tax planning is important for everyone. Just because a taxpayer already filed [his or her] tax return doesn't mean [he or she doesn't] need to think about taxes for the rest of the year. In fact, what they do now may affect any tax they might owe next year. It could also affect the refund they expect.
Since federal taxes operate on a pay-as-you-go basis, taxpayers need to pay most of their tax during the year as they earn the income. Taxpayers should make sure they're having the correct amount of tax withheld from their paychecks. It's a good idea for taxpayers to do a Paycheck Checkup for these reasons:
- Having too little withheld could lead to a smaller than expected refund.
- Having too little withheld could even lead to an unexpected tax bill.
- Employees who have too much tax withheld will see less money in each paycheck. Having more money in each paycheck may be more helpful than getting a large refund when they file.
Taxpayers can use the Tax Withholding Estimator to check their withholding. All taxpayers should use this tool to do a Paycheck Checkup ASAP if they haven't already done so in 2019. Some taxpayers should do another Paycheck Checkup even if they already did one this year. This includes anyone whose personal or financial information changes due to a life event. Some life events that can affect withholding are:
- Having a baby
- Getting a new job
- Getting a raise at work