Don’t Be overwhelmed by Taxes! A Straightforward Guide to 2024 Tax Filing

We're a few short weeks away from the deadline to file taxes and it may seem overwhelming. However, navigating tax time becomes easier with an understanding of payments, withholdings, and quarterly payments, which is critical for avoiding surprises during tax filing. Our latest blog offers a straightforward guide to filing your taxes.

Three months of the year is already behind us, which means we are now facing tax time! Let’s make sure that you are prepped and ready to file 2024 tax returns from your 2023 earnings.

 

The most common questions we get from our clients are related to payments, withholdings, and quarterly tax payments. These topics are of primary interest to many tax players.  Let’s take a closer look at their meaning. Understanding these terms will enable you to avoid any last-minute surprises when you file your taxes.

 

Payments are generally referred to as the taxes that you owe Uncle Sam based on your income. In theory, the more you earn, the more you will owe in taxes.  There are strategies that can be applied that allow you to budget accurately so that you can avoid any surprises.

 

Withholdings are the amount of money taken out of your check to pay against your anticipated tax liability. You can choose your withholdings, and while they are typically done at the beginning of the year, you can change them at any time. Life-changing events like marriage or buying a new home might trigger events that cause you to change your withholdings. 

 

Quarterly payments are used to make regular tax installments and help you avoid a hefty tax bill at the end of the year. Freelancers, small business owners, and high-net-worth individuals often leverage paying these regular installments so that their tax burden is manageable. It is advisable to work with a tax advisor to anticipate what amount, if any, you should pay quarterly to have a more predictable tax bill.

Importance of Extensions

Extensions are great tools for individual tax filers who need extra time to gather all their tax documents and ensure accuracy.

 

The standard tax filing deadline for 2024 is April 15th. If you are afraid you will miss that date, you can request an extension. You must file the extension on April 15th. This allows you to file your taxes by October 15th

 

It is extremely important to remember that an extension to file is not an extension to pay! If you owe taxes, the original payment deadline of April 15th still applies. You could face late payment penalties and interest charges on any unpaid taxes. These fees can snowball quickly, so staying on top of deadlines is key to avoiding a financial headache.

Managing Withholdings Effectively

For almost every income earner, your employer takes your Gross Income and pays a part of it to the government; this is referred to as a tax withholding. Managing your withholdings correctly ensures that you are not hit with a large tax bill.

 

It is pretty straightforward for most individuals. But things get a bit trickier with multiple income sources. Freelancers, small business owners, and those with investment income might find themselves under-withholding. When this happens, they end up with a huge tax burden that they may be unprepared to pay at tax time.

 

The key is finding the sweet spot—not withholding too much (leaving you with less cash in your pocket) or too little (facing large penalties later).

 

        ➢ If you find yourself in this situation, try using the IRS withholding calculator. This online tool helps you figure                  out the right amount to withhold based on your income and circumstances.

 

Remember, your income might fluctuate throughout the year. Perhaps you are a salesperson, and you are going to get a large bonus, or you decided to drive Uber in your spare time. It’s wise to review your withholdings periodically and adjust them if needed. All you need to do is

 

Gather your income estimates (wages, bonuses, freelance earnings, etc.) and any deductions or credits you qualify for (student loan interest, retirement contributions, etc.).


With this information, you can use the IRS withholding tables or online calculators to figure out the ideal withholding amount for each paycheck.

 

While this may seem time-consuming and could take some tweaking, you will find that taking the time now will save you stress later.

Quarterly Tax Payments: Who Should Consider Them?

What if you could avoid the year-end scramble and looming tax bill entirely? This is where quarterly tax payments, also known as estimated tax payments, come into play. Another way to think of quarterly payments like spreading your tax burden throughout the year instead of getting hit with a giant bill all at once.

 

While most people think these payments are only for freelancers and the self-employed, in actuality, anyone with income that isn’t subject to withholding (like independent contractors or small business owners) might need to make them, too.

 

Here’s why quarterly payments can be a game-changer:

 

Eliminate Underpayment Penalties: Keeping money in your pocket feels great throughout the year. But win your taxes come due, the bill creates a bit of heartache. With regular payments, you’ll avoid unexpected, large tax bills.
Improve Cash Flow: Spreading out your tax payments throughout the year helps you budget more effectively. No more scrambling for a lump sum come April.
Enjoy a Stress-Free Tax Season: Filing is less arduous because you’ve already paid most of your taxes throughout the year.

 

Making quarterly payments might seem cumbersome at first glance. But it’s a smart move that typically pays off in the long run. It allows you to control your finances.

Effective On-going Tax Management

Tax season is easy when you know you’re well-prepared. Taking a proactive approach can transform it into a smooth journey towards a bright financial future.

 

Here are key things to follow:

● Regularly assess your income sources. Are there raises, bonuses, or new side hustles on the horizon? These can impact your tax situation.
● Keeping detailed records of income and expenses is crucial. This is to ensure accuracy when estimating taxes and avoid any unwanted surprises.
● Tax laws and regulations can change. Staying informed helps you identify deductions and credits that can minimize your tax liability.

 

If you find tax planning to be overwhelming, you may benefit from working with a tax accountant in Atlanta. They can help you take advantage of tax-saving opportunities while following the tax laws. A tax professional can give you personalized advice that fits your financial situation so you can make informed decisions and get the most out of your taxes.

Ready To File Your Taxes for 2024?

Tax season doesn’t have to be complex. By being proactive and understanding these key concepts, you can conquer confusion, meet deadlines, and emerge victorious (with more money in your pocket)!

 

So, gather your documents, take control of your taxes today, and set yourself up for success! If you still need help with 2024 tax filing, consult a tax accountant in Atlanta today.

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Positive Rate Tax Advisors is your trusted partner in navigating the complex world of taxation. Our team of experts is dedicated to providing the highest quality service to our clients. Let us ease your tax burdens and assist you with all your tax planning and compliance needs. Contact us today to schedule a consultation.

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