Taxpayers should look ahead to 2013 season

BY THE TRI-CITY HERALDNovember 10, 2012 

The passing of the 2012 federal tax filing extension deadline last month means now is a good time to start looking ahead to the 2013 tax filing season.

According to the Internal Revenue Service, many working taxpayers may benefit from a review of their federal income tax withholding rate.

"It's not too late to adjust your 2012 tax withholding to avoid big tax refunds or tax bills when you file your tax return next year," said IRS spokesman David Tucker II.

"Act soon, though, to adjust your tax withholding to bring the taxes you pay throughout the year closer to what you actually owe."

Each year, millions of American workers have far more taxes withheld from their pay than is required, resulting in large refunds.

Refunds are good but they have to wait weeks after filing their tax return before they can access their money.

Tying major financial decisions to the receipt of a refund can be stressful -- especially for taxpayers depending on it to arrive by a certain date.

Others wind up owing money on tax day and have to squeeze an unexpected federal tax bill into their budget.

"By reviewing and adjusting your withholding rate, you're less likely to have to write out a big check in April to pay taxes. That's if your withholding is less than it should be," he said.

"Or, if your withholding rate is too high, adjust it to put more money in your paycheck now. The timing couldn't be much better for those looking ahead to the holiday gift-giving season, cold weather heating bills and end-of-year charitable donations," Tucker said.

Workers can generally submit a new Form W-4 anytime they wish to change the number of their withholding allowances.

However, if a life event results in the need to decrease withholding allowances or their marital status changes from married to single; workers must give their employers a new Form W-4 within 10 days.

Many workers can use the IRS Withholding Calculator on the IRS website, www.IRS.gov, to help them review their withholding information.

IRS Publication 505, Tax Withholding and Estimated Tax, also has information for employees and self-employed individuals, and explains the rules in more detail.

The forms and publication are available at IRS.gov or by calling 1-800-TAX-FORM (1-800-829-3676).

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