#1 Check the Tax Withholding on Your Paycheck Twice

Because income tax in the US is “pay as you go,” your employer deducts money from your paycheck, and independent contractors are required to pay estimated quarterly taxes. Insufficient taxes paid during the year may result in a penalty being imposed at tax time.                                                     

Your W-4 tax form, which contains information about your filing status and anticipated tax deductions, is used by your employer to determine the amount that will be deducted from your paycheck. Reviewing your W-4 and present withholding at the end of the year is an excellent opportunity to determine if you want to make changes.

You can use the IRS’ Tax Withholding Estimator tool to estimate your current withholding and expected tax refund in order to change your W-4 form. At any time, you may present your employer with an updated W-4 form, and they must make the necessary modifications by the start of the first pay period that starts more than thirty days after you submit it.