Thanksgiving, a time of gathering with family you haven't seen for a while. But sometimes, even when we get along with our relatives, we need a break from all that familial reconnecting.
You could take a walk. Or check out a calming app. Or take care of a tax task.
To help with that third suggestion, the rest of this Thanksgiving week (and weekend) the ol' blog will offer a tip a day on tax turkeys to avoid.
The first tax turkey and how to correct it is an easy one, adjusting your workplace withholding.
When to revise your withholding: Withholding is something that most workers tend to forget about. They just let the amount that comes out of they paychecks continue, even when things in their lives have changed. That could be costly.
The only constant in life is change. As you catch up with your relatives this Thanksgiving, you're likely sharing tales of and celebrating momentous events. Your new spouse is being introduced to your clan. Your parents are spoiling their new grandbabies. Your cousin is being incredibly patient as you show (again) photos of your new home.
In addition to making for a more engaging holiday get-together, all these (and more) life changes could have tax implications. And all of these could be good reasons to adjust withholding.
Calculating your correct taxes: As I noted in my November tax moves post, by now you should have a good idea of what your final 2022 earnings will be. If a check of your paystub shows you're taking out too much or too little, a tweak for the last few pay periods of the year could help at least a little.
Yes, I know some people like to overwithhold so they'll get a refund check when they file. But with inflation still bumping up our daily expenses, it could be helpful to have more cash in hand right now.
Adjusting your payroll withholding is even more important if you discover you'll likely owe tax at filing time. No one likes having to send the U.S. Treasury more money with their Form 1040. You can reduce that bill by having a bit more taken out for your remaining 2022 paychecks.
In either case, consider adjusting your withholding now.
The Internal Revenue Service's withholding estimator can help you determine the proper amount. It also works for retirees, self-employed individuals, and wage earners who supplement their salaries with gig work.
When you get back to the office next week, plug your withholding changes into the new Form W-4 you'll give your payroll administrator. That way, your company can withhold the new amount from your remaining paychecks.
You can find more on using the IRS online tool and filling out a W-4 in my post Owe the IRS? Got a big refund? Adjust your withholding.
Back to the family: OK, that didn't take too long. And not only are you refreshed and ready for more family mingling, you've avoided the tax turkey of incorrect withholding.
Now back to tackling the pre-Nov. 24 menu leading up to the real, and tasty, roasted fowl.
And I'll see you back here tomorrow for tax turkey #2.
Update, Thursday, Thanksgiving Day, Nov. 24, 2022: Below are the links to this year's five tax turkeys.
2022's Tax Turkeys 🦃 🍗 🦃 to Avoid
Addendum, Sunday, Nov. 27, 2022: The goal of Don't Mess with Taxes is to talk turkey when it comes to tax matters. But if you're looking for some literal turkey talk, check out my November post at my tumblr tax blog, Tumbling Taxes. It includes a video of Texas turkey callers.
You also might find these items of interest:
- Reasons why you need to adjust your tax withholding now
- Texas border troops could face surprise tax bills due to underwithholding error
- Have a side hustle? Pay estimated tax and/or adjust your main job's withholding