1. As an individual: Make sure your withholdings are correct.
“If someone is doing their own taxes, many times people get to the end of the preparation and filing process and realize they owe money when they weren’t expecting it. There may be circumstances where you may have to make estimated payments throughout the year, or there might be circumstances or situations where you need to have extra federal income taxes withheld from your paycheck throughout the year. Making sure your withholdings are correct throughout the year can save the taxpayer from having to pay IRS underwitholding penalties when you go to file your return,” said Roger Ortman, EA, MST. Ortman is an adjunct professor of taxation and accounting at the Kelley School of Business Indianapolis and received both his undergrad in accounting and Masters of Science in Taxation from the Kelley School.
“Throughout the year, it’s a good idea to have frequent check-ins with your tax advisor, particularly if you’re going to be changing jobs, to make sure that your withholding is being taken into account properly,” said Leslie Boyd, CPA, MST. Boyd received her MST from the Kelley School of Business Indianapolis and is a principal at CliftonLarsonAllen LLP.
“For example, if you’re starting a new business: talk to your advisor early about that, so you can make the appropriate election and choice of entity decisions in terms of how to structure that.”
To make sure that your federal tax withholdings are correct and that you haven’t underpaid your federal income taxes, Ortman recommends that you check here. Keep in mind, if you owe self-employment tax, alternative minimum tax, or certain other taxes; you should use the instructions in IRS Publication 505, Tax Withholding and Estimated Tax.