Tax planning has turned into a year round process, as events impacting personal and financial changes can affect our income tax liability. Although the “final” tax payments are not due until April 15th of the following year, our current year tax must generally be paid in on an ongoing basis. We must determine and balance the correct amount to pay in at the proper times during the tax year while maximizing our take home pay to cover our living expenses.
The IRS imposes a penalty for failure to pay the proper current year estimated tax. Taxpayers that are employees must generally pay at least 90 percent of their taxes equally throughout the year through withholding (or a percentage of their prior year taxes). If you do not meet this requirement, you may owe penalties and interest when you file your returns.
Changes in your life can have an effect on your required estimated withholding taxes for the current year and desired take home pay. Increases in income as a result of receiving a raise or increases in living expenses (as a result of having a baby or additional dependent responsibilities) can have a direct impact on your desired take home pay. Your take home pay can be adjusted by updating the Form W-4 with your employer.
The key is to balance the maximum take home pay to cover family living expenses with the correct withholding taxes to meet the annual tax requirements. This can be accomplished by performing a paycheck checkup periodically, or when a major life event occurs. An updated, proper, and desired income tax withholding can be computed based on your most recent pay check in conjunction with other changes in your anticipated income and expenses. Sometimes multiple paycheck checkups are required in the tax year. The frequency of checkups depends on how many events occur during the tax year that affect your income tax liability.
The comfort of knowing you have the correct amount of take home pay and withholding taxes paid in for the year helps you achieve your overall financial goals. Our team of experienced professionals and advisors at Gramkow Carnevale Seifert & Co.,LLC can be a valuable asset to help you determine your proper income tax withholdings and corresponding desired take home pay.
Meet Our Team
Patrick O’Reilly (Pat) is a Director at Gramkow, Carnevale, Seifert, & Co., LLC (GCS). He joined the GCS team in 2018 and has about 12 years of previous experience in private accounting, specifically in various management positions in financial accounting and reporting, and about 13 years of experience in public accounting. Pat specializes in taxation with various different practice areas such as estates and trusts, gift tax, business entities, etc.
Pat graduated from Seton Hall University with a Bachelors Degree in Accounting and a Masters degree in Taxation. He is s Certified Public Accountant in the state of New Jersey. Pat is a member of AICPA, NJ Society of CPAs, and NJFPA. He enjoys traveling, sports, and reading in his free time.