Latest news with #TaxWithholdingEstimator
Miami Herald
07-05-2025
- Business
- Miami Herald
IRS sends stern warning to employees after layoffs
Business IRS sends stern warning to employees after layoffs It is no secret that the IRS has undergone some dramatic workforce changes over the past few months, threatening tax returns and the future of free taxpayer services. The agency raised eyebrows in February when it fired 7,000 employees, which impacted tax compliance workers. These employees were responsible for ensuring taxpayers follow tax laws, correctly report their income, file their returns, etc. Don't miss the move: Subscribe to TheStreet's free daily newsletter The IRS reportedly later emailed a few of the workers it fired to inform them that they could return to work full-time on April 14, the day before the deadline for Americans to file their taxes. Related: Free IRS services taxpayers love face a major threat A day after the tax filing deadline passed, the IRS sent a memo to employees informing them that it is planning to shrink its workforce by 40% through layoffs and buyouts. The cuts are set to happen in two phases, the first one began last month, and the second one will start in August. Some IRS departments, including those that operate free taxpayer services, will be more affected by the cuts than others. The Tax Withholding Estimator is a free IRS tool that can help you figure out your federal income tax withholding. Image source: Walzberg/picture alliance via Getty Images IRS sends a stern email to employees As the IRS shrinks its workforce, it has sent another memo to some employees warning them that they will be expected to work mandatory weekend overtime hours, according to a new report from Federal News Network. On the weekends of May 10 and May 17, employees in the IRS Input Correction Operation (ICO) department at the agency's Kansas City office will be required to work eight hours of overtime each day. The ICO department is responsible for resolving tax return errors flagged by the IRS' Error Resolution System (ERS). Related: IRS makes a drastic decision that could impact tax returns The memo states that "ALL minimally and fully successful" ICO employees will be required to complete the 16 hours of overtime. Employees can work overtime on weekdays, but it is "not part of the required 16 hours" of weekend overtime. "Remember, if we do not make a sizable dent in the ERS rejects…inventory, there is the possibility of additional required overtime," wrote IRS Operation Manager Latifah Hisham in the memo. IRS suffers a major loss The move from the IRS comes after it lost about 11% of its workforce in March, according to a new report from the Treasury Inspector General for Tax Administration. The report also revealed that about 31% of IRS revenue agents, who are responsible for performing audits, have either been fired or accepted a buyout offer during the first three months of 2025. The loss of IRS workers comes as Elon Musk, who runs the Department of Government Efficiency (DOGE), and President Donald Trump have been on a mission to shrink the federal government through job cuts. More Labor: Their main goals are to "eliminate unnecessary programs" and "reduce bureaucratic inefficiency," according to a recent executive order. Recent data from shows that so far this year, DOGE has laid off over 61,000 government employees, and 171,843 federal employees have chosen to depart. For the IRS specifically, Trump is reportedly planning to abolish the agency and replace it with a service that collects revenue from tariffs (taxes companies pay to import goods from overseas). This would fund the U.S. government, according to U.S. Secretary of Commerce Howard Lutnick. "Donald Trump announced the External Revenue Service, and his goal is very simple: to abolish the Internal Revenue Service and let all the outsiders pay," said Lutnick in an interview with Fox News in February. Related: Veteran fund manager unveils eye-popping S&P 500 forecast The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc. This story was originally published May 6, 2025 at 1:23 PM.
Yahoo
15-04-2025
- Business
- Yahoo
Tax Day 2025: How to find out what you owe if you haven't filed your income tax return
It's April 15, and you know what that means — it's Tax Day 2025 and time to submit your tax returns. If you're scrambling to complete them in time, then you might be wondering if you can file for an extension or if there's a way to find out how much you owe if you haven't filed them yet. Filing an extension doesn't mean you get an extension to pay any taxes owed. If you haven't paid and are eager to know how much you may owe, there's a way to find out. Here's how. More: Tax Day 2025 is almost here. How to file taxes at the last minute and track your refund If you haven't finished your taxes, you can file a six-month extension today. But as we mentioned, an extension to file is not an extension to pay. So how do you find out if you need to pay the IRS? The Internal Revenue Service (IRS) provides a way to see how much you may owe in taxes with their Tax Withholding Estimator. It is not guaranteed to give you the exact amount you owe, but it can help give you an idea of how much it might be. Here's how the Tax Withholding Estimator can be helpful for, according to the IRS: Estimate your federal income tax withholding See how your refund, take-home pay or taxes due are affected by the withholding amount Choose an estimated withholding amount that works for you To use this quick way to find your tax estimate, you will need these things: Your pay stubs for all jobs (and your spouse too, if applicable) Other income info (side jobs, self-employment, investments, etc.) Your most recent tax return Though the Estimator is a quick way to see how much you owe, only some people can use it. If you have a nonresident alien status or your tax situation is complex, you shouldn't use the Estimator. If you've waited until the last minute to file your taxes on Tax Day 2025, you have until midnight to get your return to the IRS, H&R Block reports. However, you won't have that long if you're mailing your taxes via the Postal Service. Most post office branches will maintain regular hours on April 15, according to Newsweek. This article originally appeared on The Columbus Dispatch: Tax Day 2025: See what you owe if you haven't finished your taxes
Yahoo
08-04-2025
- Business
- Yahoo
Tax Day Countdown: 7 Tax Filing Errors That Could Cost You Thousands
In the United States, tax filing can be a complicated process. Even with a tax professional or tax software guiding you, there are plenty of mistakes that can be made. Sometimes the smallest error while filing your return can end up costing big, from paying too much to being hit with an unexpected bill instead of a refund. Check Out: Try This: There can even be financial penalties for underpaid federal, state or local taxes if the underpayment is caused by negligence, disregarding the rules, or major miscalculations. Avoiding these errors and tax liabilities starts with understanding where the mistakes commonly happen — from your W-2s to retirement savings documents — and taking the necessary steps to get things right before Tax Day (which is April 15, 2025 this year). Here's hoping you will receive a refund instead of a bunch of retroactive legal advice from your tax preparer, but just in case, it's a good idea to take a look at the most frequent tax return errors according to the IRS, and how to steer clear of them when you file. Names and Social Security numbers on tax returns have to be an exact match for official records. Just one wrong digit of a Social Security number or a typo in a name can delay processing, so it's important to carefully check every detail against official documents before submitting. Find Out: Employees should check the income tax their employer is withholding every year, particularly if there have been any big life changes that could have an impact on taxes, like getting married, having kids or starting a side gig. The IRS Tax Withholding Estimator can help make sure the numbers are adding up. Whether single, married filing jointly or head of household, choosing the wrong filing status has a direct impact on tax rates and deductions. The IRS offers an Interactive Tax Assistant to help in identifying the right status, among other things. What might seem like a simple math error can cause larger issues at tax time, like incorrect refund amounts, underpayment notices or penalties. Checking and double-checking calculations, whether done manually or electronically, is vital. Credits and deductions can make a big difference to final tax figures, but eligibility criteria varies and isn't always easy to understand. Taxpayers could easily miss out on something they're entitled to, or alternatively claim something incorrectly and have to pay it back. When a refund is due, the last thing the recipient needs is a direct deposit error, but giving the wrong bank account or routing number can lead to refunds being sent to the wrong place, often taking months to resolve. Whether it's a simple mistype or using old bank details in error, this is another reason why double-checking forms is so important. An unsigned tax return is considered incomplete and won't be processed until the signature is provided. If a refund is due, funds will likely be delayed, and taxpayers could even be hit with a penalty for late filing. More From GOBankingRates Mark Cuban: Trump's Tariffs Will Affect This Class of People the Most5 Cities You Need To Consider If You're Retiring in 202510 Cars That Outlast the Average Vehicle This article originally appeared on Tax Day Countdown: 7 Tax Filing Errors That Could Cost You Thousands Sign in to access your portfolio
Yahoo
07-04-2025
- Business
- Yahoo
4 Last-Minute Ways To Save Money on Your Taxes, According to George Kamel
Taxes seem to be one of the only guarantees of life. There's no way around them, and though it can be cathartic to complain about filing your tax return, when it comes to your total income or even taxable income, no one escapes the IRS tax-free. Though nobody wants to owe more money on their tax bill than is absolutely necessary, this doesn't mean there aren't also ways to save on everything from your retirement plan to capital gains. Luckily, there are several smart strategies you can employ to reduce your total tax liability. In an informative video, personal finance expert George Kamel shared some tips for how to save money on your taxes. While it may be too late to take advantage of some of these tips for filing your state or federal income taxes this year, keep these strategies in mind, as they could help you save money on your taxes in the future. Check Out: Read Next: If you owed a tax bill when you filed in recent years, you're likely withholding too little when it comes to your paychecks. However, if you've been receiving tax refunds each year, you're likely overpaying your taxes throughout the year. You can use the IRS Tax Withholding Estimator or other tax software to figure out the appropriate tax withholding for you based on your income, as wells as tax deductions and earned income tax credits. This way, you don't end up with a huge tax bill when you file and you don't give the government a 0% interest loan all year long. If you owe a tax bill this year or receive a large tax refund, take the time now to look at your withholding to ensure you're paying only what you need to. Discover More: If you're expecting to receive a bonus or additional payment close to the end of the year, consider asking for a deferral. This might include a holiday bonus from your employer or your final paycheck of the year. If you're self-employed, you can strategically defer payments by waiting until the end of December to bill your clients so that you aren't paid until the following year. The reason for deferring the payments to the following year is that you'll delay your tax liability on the additional income into the following tax year. However, deferring your income to save on taxes usually makes sense only if you expect to be in the same or lower tax bracket the following year. Making 401(k) or IRA contributions is another smart way to reduce your tax liability. The greater the percentage of your gross income that you allocate toward your 401(k) or IRA, the less taxes you'll owe to the IRS since you'll be deferring tax liability until later in life. For 2025, the 401(k) contribution limit is $23,500 and the IRA contribution limit is $7,000. The 401(k) catch-up contribution for those aged 50 and over is an additional $7,500, for a total of $31,000, and the catch-up contribution for IRAs is $1,000. Throughout the year, keep this in mind and make/increase contributions to your retirement accounts to reduce your tax bill. The IRS requires seniors to start withdrawing funds from tax-deferred retirement accounts starting in their 70s, which are known as required minimum distributions (RMDs). If you neglect to take your RMDs on time, you could owe a penalty of up to a whopping 25% on the amount you were supposed to withdraw. So be sure to plan throughout the year and take the RMDs from either your traditional IRA or 401(k) to avoid penalties. Caitlyn Moorhead contributed to the reporting for this article. More From GOBankingRates 6 Used Luxury SUVs That Are a Good Investment for RetireesI'm Retired and Regret Moving to Arizona -- Here's Why How Much Money Is Needed To Be Considered Middle Class in Every State? This article originally appeared on 4 Last-Minute Ways To Save Money on Your Taxes, According to George Kamel Sign in to access your portfolio
Yahoo
04-02-2025
- Business
- Yahoo
What is withholding tax, and do I check or change it?
When you get your paycheck every other week, you'll notice the amount you earned during the pay period isn't the same amount you take home. That's because your employer withholds some money from each paycheck in the form of withholding taxes, which help pay your income tax bill throughout the year. It's important to understand how income tax withholding works, how it affects your tax bill (or refund) at the end of the year, and how to check or change your tax withholding to make sure you're having the right amount taken out for your situation. A withholding tax is the money your employer deducts from your paychecks each month to pay income taxes on your behalf. The amount of taxes your employer will withhold depends on your earnings and the information you provide on the IRS Form W-4. The federal government operates on a pay-as-you-earn tax system. In other words, you're required to pay taxes on your income as you earn it. Tax withholding ensures the government will have regular tax revenue throughout the year. And for your part, it helps you avoid a hefty tax bill when you file your income tax return the following spring. Withholding taxes are required for most income, including regular pay, commissions, pensions, bonuses, reimbursements, gambling winnings, and other income. If you aren't subject to tax withholding — if you're self-employed, for example — you're still required to pay taxes by certain due dates throughout the year in the form of estimated tax payments. Your employer calculates your tax withholding based on your annual earnings and the information you provide on your W-4 form. On the W-4, you provide information such as: Your filing status The number of dependents Other income, including interest, dividends, and retirement income that doesn't have taxes automatically withheld Deductions you're eligible for other than the standard deduction Extra withholding taxes you want withheld each pay period Once you complete your W-4, your employer uses withholding tables provided by the IRS, along with other adjustments on your W-4, to help calculate the correct withholding amount. The amount you'll pay depends on the income tax rate that applies to your earnings. If you live in a state that has income taxes, you'll also likely have money withheld for your state income taxes. Because each state has its own tax code, the system for calculating tax withholdings and the way you can check or change your withholding will vary from state to state. Read more: Federal income tax brackets and rates for 2024-2025 The simplest way to check your tax withholding is by using the IRS Tax Withholding Estimator. You'll provide information about yourself, your income and withholding, your income adjustments, and your tax credits and deductions. Based on the information you provide, the IRS calculator will determine your anticipated tax obligation. It will also project a tax refund or underpayment amount based on your expected tax withholding. While it's not guaranteed to be accurate, you can expect it to be close to your actual situation as long as you provide comprehensive and accurate information. The IRS recommends checking your tax withholding occasionally to ensure you're on track to pay the correct amount of taxes throughout the year. For example, you could check once per year plus any time there are changes in tax laws that could affect your tax liability. The IRS also recommends checking your tax withholding when there are changes to your finances or tax situation, including: Lifestyle changes such as marriage, divorce, a new child, a home purchase, retirement, or bankruptcy A significant change to your earned income (a new job, a significant pay increase, leaving the workforce, etc). Income that's not subject to withholding, including interest, dividends, capital gains, self-employment income, and distributions from retirement accounts Eligibility for certain itemized deductions, including major medical expenses, interest expenses, charitable gifts, dependent care, education costs, etc. Read more: How to choose the right federal tax filing status When you start a new job, you'll have to complete a W-4 form to set your tax withholding for the year. Even if you've already completed one, you may decide to change your withholding based on life changes or discrepancies when you check your withholding. If you need to change your federal tax withholding, you can simply submit a new W-4 to your employer. It's important to be as accurate as possible when completing the form to ensure you're having enough tax withheld without overpaying significantly. When you're completing your W-4, the provided Multiple Jobs Worksheet and Deductions Worksheet can be helpful in reporting other factors that may increase or decrease your tax liability. And remember that if you're concerned about underpaying, you can always use the 'extra withholding' option to have a bit extra withheld from each paycheck. You may be exempt from tax withholding if you had no federal income tax liability last year and don't expect to have any tax liability in the current tax year. If that's the case for you, simply write 'Exempt' on the W-4 form you complete for your employer. Keep in mind that just because you believe you're exempt from tax withholding doesn't necessarily mean you won't be on the hook for a tax bill. If you do have enough income, you'll end up owing a tax bill to the IRS and could also be responsible for penalties. Your withholding taxes don't generally represent the total amount of income taxes you'll owe for the year. When you file your tax return the following March or April, you'll use your total income, deductions, credits, and other factors to determine how much you owe in income taxes. If the amount of withholding tax you've paid exceeds the amount of tax liability you owe, you'll get a refund from the federal government. On the other hand, if you haven't paid enough withholding taxes, you'll end up with tax due. Some people prefer getting a refund at the end of the year, but either a large refund or a large tax bill could be a sign you need to change your tax withholding. For many taxpayers, the ideal scenario is to pay withholding taxes as closely as possible to their actual tax liability.
