How To Avoid Paying Additional Tax on April 15
- September 21, 2010
- David Greene
- Comments Off on How To Avoid Paying Additional Tax on April 15
Everyone hopes to get a refund at tax time. However, getting a refund simply means you overpaid the IRS during the year. The ideal situation is to owe no additional tax and also not get a refund on April 15.
What if you owe additional tax on April 15? How can you be sure this does not happen next year? There are several solutions. If you are self employed you are required to pay estimated tax for the current year.
These payments are due on April 15, June 15, September 15 and January 15 of the following year. Each payment should be ¼ of your total tax bill for the previous year. If this is done and your income is about the same, you should have no or very little additional tax due next April. If you find your income increasing during the year, you should also increase your estimated tax payments.
If you work for wages and taxes are withheld from your check but you still owe additional tax, there are two things you can do. First, you can lower the exemptions you claim so more tax is withheld each pay period. For example, if you claim 2 exemptions, lower that to 0 or 1. Second, you can direct your employer to withhold more federal tax from your paycheck. This can be any amount you wish. If you utilize one or both of these solutions, you should not have to pay additional tax on April 15.