End of Year Holiday Tax Pitfalls with the IRS
During the holidays, so many different activities will grab your attention: family dinners, Christmas shopping, decorating and more. It’s hard to keep anything straight when you’re running around trying to make sure everything is perfect, but one task that’s imperative to keep track of is paying the right amount in taxes.
While issues with the IRS may crop up around the spring, it’s during winter and end of year where things manifest. Many taxpayers will be caught off guard when the IRS starts to send notices or ends up on your doorstep, but it can be easy to find the root cause.
Check your pay stubs to see how much you’ve already paid into your taxes so far. Ask yourself, “Does this look similar to last year?” If it doesn’t, that’s your first red flag. If your income is similar to last year and you’re paying less in taxes, it may be cause for concern. To avoid this, find the difference in what you’re paying now versus what you paid last year. Increase the amount you’re withholding to reflect the difference in what you’ve paid this year over the previous year.
This way, you can avoid any IRS headaches and be ready to pay the difference if you underestimated your taxes. Always be proactive with the IRS to help reduce the chance of them having to send you notices or knocking on your door.
Even if you don’t see a notice from the IRS now, the best way to handle them is not to deal with them in the first place.
~ Michael Raanan MBA, EA, Former IRS Agent