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There is still time to act to avoid surprises at tax-time

posted Nov 18, 2014, 10:45 PM by Zaher Fallahi

Even though only about 42 days remain in 2014, you still have time to act so you aren’t surprised

at tax-time next year. You should take steps now to avoid owing more taxes or getting a larger

refund than you expect. Here are some actions you can take to bring the taxes you pay in

advance closer to what you’ll owe when you file your tax return:

Adjust your payroll withholding. If you’re an employee and you think that your tax withholding will

fall short of your total 2014 tax liability, you may be able to avoid an unexpected tax bill by

increasing your withholding. If you are having too much tax withheld, you may get a larger

refund than you expect. In either case, you can complete a new Form W-4, Employee's

Withholding Allowance Certificate, and give it to your employer. If you feel you will be short,

enter the added amount you want withheld from each paycheck until the end of the year on

Line 6 of the W-4 form. You usually can have less tax withheld by increasing your withholding

allowances on line 5. You can use the IRS Withholding Calculator tool on IRS.gov to help

you fill out the form.

Report changes in circumstances. If you purchase health insurance coverage through the

Health Insurance Marketplace, you may receive advance payments of the premium tax credit

in 2014. It is important that you report changes in circumstances to your Marketplace, so you

get the proper type and amount of premium assistance. Some of the changes that you

should report include changes in your income, employment or family size. Advance credit

payments help you pay for the insurance you buy through the Marketplace. Reporting

changes will help you avoid getting too much or too little premium assistance in advance.

Change taxes with life events. You may need to change the taxes you pay when certain life

events take place. A change in your marital status or the birth of a child can change the

amount of taxes you owe. When they happen you can submit a new Form W–4 at work or

change your estimated tax payment.

Be accurate on your W-4. When you start a new job, you fill out a Form W-4. It’s important

for you to accurately complete the form. For example, special rules apply if you work two jobs

or you claim tax credits on your tax return. Your employer will use the form to figure the

amount of federal income tax to withhold from your pay.

• Pay estimated tax if required. If you get income that’s not subject to withholding you may

need to pay estimated tax. This may include income, such as self-employment, interest or

rent. If you expect to owe $1,000 or more in tax, and meet other conditions, you may need to

pay this tax. You normally pay the tax four times a year. Use Form 1040-ES, Estimated Tax

for Individuals, to figure

Zaher Fallahi, is a 1983 CPA, and has provided tax and accounting services to many dentists, physicians and other health care and medical professionals since 1992. Zaher Fallahi  is known as Los Angeles Doctors’ Tax CPA and Orange County Doctors’ Tax CPA. Telephone: Los Angeles (310) 719-1040 and Orange County (714) 546-4272, e-mail: taxattorney@zfcpa.com

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