Why Should Business Owners Prioritize Tax Withholdings Optimization as 2023 Concludes?
As we approach the end of 2023, it’s crucial for business owners to pay close attention to their tax withholdings. The Internal Revenue Service (IRS) is urging taxpayers to review their withholding now to avoid any unpleasant surprises during the tax-filing season next year. While it’s ideal to review these matters early in the year, adjustments made in the final weeks of 2023 can still make a significant difference.
Here are some essential steps to keep in mind
Use the Tax Withholding Estimator
The Tax Withholding Estimator, available in both English and Spanish, is a valuable tool for determining whether your income tax withholding is accurate. This resource helps you make any necessary adjustments to prevent a potential tax bill or a substantial refund.
Understand Taxpayer Options for Payment
Business owners, freelancers, and individuals with non-withheld income sources should consider making quarterly estimated tax payments. These payments can be made through various channels, such as the IRS2Go app, online payment options, or by mail using Form 1040-ES. Maintaining an Online Account through the IRS website also enables you to manage your tax records effectively.
Stay Prepared for Life Events
Certain life events, such as marriage, childbirth, or job loss, can significantly impact your tax situation. Make sure to adjust your withholding accordingly to avoid any complications. Additionally, be aware of special tax provisions that may apply in the case of disasters like wildfires and hurricanes.
Boost Your Take-Home Pay
Adjusting your withholding accurately ensures that you maximize your take-home pay, rather than having excess amounts withheld and waiting for a tax refund. To expedite the process, consider filing your taxes electronically and opting for direct deposit, which is the fastest way to receive your refund from the IRS.
While the standard time for receiving a refund is 21 days, some refunds might take longer due to various factors. By staying informed and proactively managing your tax withholdings, you can ensure a smoother tax filing process and avoid any surprises next year. Be sure to consult with a tax professional for specific advice tailored to your business and financial situation. Stay ahead of the game to make the most out of your tax planning for 2023 and beyond.
If you’d like to discuss a strategy for your small business and help you with your taxes, Book your consultation with us today!
