Urgent IRS warning to do quick check now or face hefty tax bills in future

THE Internal Revenue Service (IRS) has suggested taxpayers check their withholdings now in order to avoid any penalties in the future.

As folks make life changes such as marriage, divorce, or children, your taxes are also subject to those changes.

Making any necessary adjustments before you do your taxes will set you up for success when filing.

The IRS also stated that checking now may even help taxpayers avoid the need for quarterly estimated tax payments.

The agency suggests using its Tax Withholding Estimator, a tool that estimates the federal income tax you want your employer to withhold from your paycheck.

This will then allow you to see how your withholding affects your refund, take-home pay, or tax due.

WHAT IS TAX WITHHOLDING?

For employees, withholding is the amount of federal income tax withheld from your paycheck.

Employers will typically withhold income tax from your paycheck and pay it to the IRS for you. 

The amount of income tax your employer withholds from your regular pay depends on the amount you earn and the information you give your employer on Form W–4.

Wages paid and any other amounts withheld are then reflected on the Form W-2, Wage, and Tax Statement, which the employee receives before January 31.

USING THE ESTIMATOR TOOL

When using the tool, it's best to have the following:

• Paystubs for all jobs (spouse too)
• Other income info (side jobs, self-employment, investments)
• Most recent tax return

Just note that you must specify a filing status and the number of withholding allowances on Form W–4.

You cannot specify only a dollar amount of withholding.

KEY FILING DATES

January 23 is the start of tax season for millions of Americans which means that your 2022 tax year returns will be due on April 18.

Those who miss that date without filing for an extension may face serious penalties.

For this year's filing season, taxpayers should remember the following dates:

• January 13: IRS Free File opens
• January 17: Due date for tax year 2022 fourth quarter estimated tax payment
• January 23: IRS begins 2023 tax season and starts accepting and processing individual 2022 tax returns
• January 27: Earned Income Tax Credit Awareness Day to raise awareness of valuable tax credits available to many people – including the option to use prior-year income to qualify
• April 18: National due date to file a 2022 tax return or request an extension and pay tax owed due to the Emancipation Day holiday in Washington, D.C.
• October 16: Due date to file for those requesting an extension on their 2022 tax returns

Millions of Americans may be able to score four tax credits between $600 and $8,000.

Plus, make sure to remember these two February tax deadlines.