NC CHARLOTTE — The Internal Revenue Service (IRS) suggests that North Carolina people change their tax withholding or payment information before the end of the summer. This way, they won’t be surprised when it’s time to pay their taxes next year.
Most people who file their taxes get a refund, but a lot of people also find that they owe money on their taxes. This could be because they forgot to make the necessary tax changes during the year because of a change in their life or job.
These people should be extra careful:
Workers in the gig economy.Those who have a “side job.”Anyone who is making money that isn’t being withheld.
These people should look at how much tax they pay or how much tax was taken out of their paychecks throughout the year to make sure it’s more like what they owe. The IRS has a tool called the Tax Withholding Estimator that can help people make sure that the amount of tax they pay or have withheld matches the amount they owe.
The IRS tells people that planning their taxes ahead of time can save them time and stress later on. Remember these important things:
How to get a refund
Pay-as-you-go is how the government tax system works. People pay taxes on their cash as they get it throughout the year. For many people, their employer takes taxes out of their pay and sends them to the IRS on their account.
Others, like people who work in the gig economy, pay their taxes on time by making estimated payments every three months. When too much is delayed or paid during the year, a refund is usually the result.
New data from the IRS shows that two-thirds of people have already gotten a refund for 2024. Nearly $270 billion in refunds were given to taxpayers by the middle of May. The average return was just under $2,900.
Don’t get a surprise bill.
On the other hand, a lot of people get fined for not paying enough tax throughout the year, which is called expected tax. The fine ranges, but for some it can be several hundred dollars. You can avoid fines by changing how much tax is withheld from your paychecks or how much you pay each month.
People who work for themselves, those who work more than one job, or those who have recently gone through big life changes like getting married or having a child should pay extra attention to this.
Because of this, the IRS wants people to use the IRS Tax Withholding Estimator this summer to make sure that their tax payments or amounts withheld are more in line with what they owe.
Estimator for Tax Withholding
People can use this helpful tool on IRS.gov to figure out how much federal income tax they need to pay for the year. Anyone can use it as long as they have a copy of their 2023 tax return and paystubs from all of their jobs or other proof of income, like from side jobs, self-employment, or investments.
This is what the Tax Withholding Estimator can be used for:
Figure out how much federal income tax is being withheld. See how the amounts that are withheld change a return, your take-home pay, or the amount of tax you owe. Pick a rough amount that works for them and their family to be withheld.
If taxpayers need to change their withholding after the tax return is complete, they should send a new Form W-4 to their workplace or pension provider. They can also change the amounts of their quarterly expected tax payments if needed.
People should also use the Tax Withholding Estimator if their lives change in a big way, like if they:
Get a new job or do some other paid work. Big change in income. Getting married. Having a baby or adopting one. Buying a new home.
For the Tax Withholding Estimator to work for most people, people with more complicated tax situations should read Publication 505, Tax Withholding and Estimated Tax, and follow its steps.
People with long-term capital gains or qualified dividends are included, as well as people who face the Alternative Minimum Tax or certain other taxes.