Year-End Tax Tip: Check Your Income Tax Withholding

Year-End Tax Tip: Check Your Income Tax Withholding

Life moves quickly — events like marriage, divorce, a new child or a home purchase are all good reasons to check your tax withholding before the end of the year and make any necessary adjustments.

The IRS’s Tax Withholding Estimator can help you determine if you are having too much or too little withheld, and how to make an adjustment to:

  • Withhold less and put more cash into your pocket now,
  • Withhold more to make up for a small deficiency, or
  • Make an estimated tax payment to avoid a tax bill or penalty when you file your tax return next year.

Pay as You Go

You pay taxes generally throughout the year, whether through salary withholding, quarterly estimated tax payments or a combination of both. If you had one or more major life events happen during the past year, then your withholding may need to be adjusted to compensate for the changes.

About 70% of taxpayers over-withhold their taxes every year, which typically results in a refund. (The average refund in 2021 was more than $2,700.) By using the IRS’s Tax Withholding Estimator, you can determine the right amount of tax to have withheld. The tool provides a user-friendly, step-by-step method for effectively tailoring the amount of income tax you have withheld from wages and pension payments.

If you need to make additional tax payments, you can pay online, by phone or from the IRS2Go app. You can schedule payments for future dates, for payment plan payments or for estimated tax payments. You can also log into your IRS.gov/account to view amounts you owe, payment plan details and options, payment history, any scheduled or pending payments, and key tax return information from your most recent tax return.

Contact Us for Help

If you have questions about adjusting your withholding, don’t hesitate to contact us. We’ll be happy to help you determine the best amount for your situation.

Are Your Marketing Costs Tax Deductible?

In most cases, the answer is YES! You can deduct expenses that help you bring in new customers and keep existing ones, including costs for advertising and marketing.

Keep in mind that advertising and marketing costs must be ordinary and necessary to be tax deductible:

  • An ordinary expense is one that is common and accepted in the industry.
  • A necessary expense is one that is helpful and appropriate for the trade or business (it does not have to be indispensable to be considered necessary).

Consider these advertising expenses that are usually deductible:

  • Costs directly related to business activities, such as print brochures, online ads and billboards.
  • Expenses for institutional or goodwill advertising to keep the business name before the public (e.g., advertising that encourages people to donate blood or that supports the local high school football team).
  • Cost of providing meals, entertainment or recreational facilities to the public as a means of advertising or promoting goodwill in the community. (Note that this generally does NOT include funds paid to influence legislation, such as advertising in a convention program of a political party or candidate.

IRS Video Tax Tip

Check out this IRS video to learn about the difference between taxable and nontaxable income.