Reminder for 10/20/2021 Seminar: Economic NEXUS vs Sales Tax NEXUS – learn more and become better prepared to ask and answer the tough questions, such as:
- What does it mean for out-of-state sellers?
- How or will this decision affect more than just sales tax nexus?
- What does economic nexus mean for sales tax?
- Does having a physical presence in a state still matter for sales tax?
- Is the traditional nexus for sales tax still alive and well?
- Do we need to begin filing in the 45 states that have a sales taxing system?
- When to recommend to a client to file income/sales tax in that state?
IRS Withholding Calculator Helps Retirees, Self-Employed, and Others with Multiple Income Sources
The IRS Withholding Estimator webpage helps taxpayers with employee wages make sure that the correct amount of tax is being withheld from their paychecks. Ordinarily, tax withholding only takes into account the tax implications of income from a particular job. If you have multiple jobs or receive other taxable income, the amount withheld might be too low. Insufficient withholding throughout the year can mean an unexpectedly large spring tax bill, perhaps even one that includes IRS penalties.
Getting your withholding right to avoid such surprises can be particularly tricky if you receive non-employee income. The Withholding Estimator tool is therefore especially useful if you:
- Receive Social Security retirement benefits but also work part-time or have a pension.
- Earn any self-employment income, which includes “side hustles” and “gig economy” income, such as driving for Uber or Lyft.
- Have unearned income such as stock dividends, interest, alimony, or distributions from a traditional (not Roth) IRA.
- Use scholarship or grant funds for expenses other than tuition and school fees (such as incidental living expenses).
In order to get the most accurate results from the Tax Withholding Estimator, you will need to know your income amounts from these sources, as well as the wages and tax withholding shown on your paychecks. The tool will also ask for your filing status and number of dependents.
If you find that not enough tax has been withheld from your 2019 paychecks, it is not too late to take action. Here are three ways to lower your spring tax bill and reduce or eliminate any IRS penalties:
- Fill out a new W-4 Form (Employee’s Withholding Allowance Certificate) and submit it to your employer, requesting that an additional amount be withheld from your paychecks.
- Complete Form W-4V (Voluntary Withholding Request) to request that tax be withheld from your Social Security checks; submit the form to the Social Security Administration.
Make a fourth-quarter Estimated Tax Payment for 2019. The due date for such a payment is January 15, 2020.