Don't Mess With Taxes

So how was your summer?

That’s right, it’s that time of year again. The summer break officially ended on Sept. 1 with the arrival of meteorological fall, which runs through Nov. 30. I know, it’s kind of an arcane tidbit, but we have other more recognizable autumnal indicators.

Youngsters across the country are back in classrooms. Their parents are back to the 9-to-5 grind after the long Labor Day holiday, with the next extended break not until the holidays.

And temperatures here in Central Texas have dropped into the upper 80s! Yes, that’s early fall weather for us. I hope it’s a bit cooler where you are. We’ve got our fingers crossed that more truly seasonal temps will make their way to the Lone Star State by the autumnal equinox on Sept. 22, the more traditional start of fall.

While we wait for the change of season to become more obvious, there are some chill tax moves we can make in September. Here are four.

1. Make your third 1040-ES payment. Millions of us must make multiple tax payments each year. We have income that’s not subject to payroll withholding, such as investment earnings, pay from gig work or other self-employment, and those random sports bets that pay off. Even some Social Security recipients need to pay estimated taxes since a portion of their federal retirement payments are taxable.

Because the U.S. tax system is pay as you earn, the Internal Revenue Service gets it cut of these types of income via estimated tax payments. In olden days, we had to snail mail our money with IRS Form 1040-ES. Now we can electronically pay the due estimated tax. Whether you’re old school or e-paying, the IRS prefers estimated payments be made in equal installments four times a year.

The deadline for the third payment is Sept. 16, a day later than the usual 9/15 due date since that’s on Sunday this year. Don’t miss it. A late estimated tax payment could end up costing you penalty and interest charges. My earlier estimated taxes primer post has the scoop on this extra tax process. You also can review my post on why, when, and how to pay estimated taxes.

2. Review, and possibly adjust, your withholding. There is nothing worse than a big surprise tax bill. You can avoid being in that unwanted situation at filing time by reviewing, and adjusting if needed, your withholding now.

The IRS' online Tax Withholding Estimator can help you determine whether you need to give your employer a new Form W-4 .

September is good time to do this, especially if you find you need to have more withheld each pay period. The added amount will be spread over the four remaining months of the year so the payday bite shouldn't be too severe.

On the other hand, if you're having too much withheld, adjusting your withholding will get you the recalculated tax money now, instead of having to wait (and possibly wait and wait) next filing season for the IRS to send you your refund. The added pay also could come in handy at holiday shopping time, which will be here before you know it.

3. Add to your retirement plan. It’s never too early, or too late, to feather your nest egg. If you have a workplace retirement plan and our employer matches your contributions, make sure you’re putting in enough to get the most out of your company’s portion.

If you followed move #2 and your adjusted withholding means you’re getting more money each pay period, shifting that amount into your 401(k) or similar workplace account is a great strategy. You’ve already been doing fine without the added income, so instead of being tempted to spend it, simply have it redirected into your retirement plan.

You also can contribute to an individual retirement account, either traditional or Roth. Sure, you have until next year’s Tax Day to make your 2024 contributions. That's up to $7,000 to either type of IRA; $8,000 if you're 50 or older. But the power compounding will work in your favor when you add to your IRA earlier. 

4. File your extended 2023 tax return. Yes, this post is on September tax moves and your extension to file gives you until Oct. 15 to get your return to the IRS. But why wait? The IRS will gladly take your return as soon as you're done procrastinating. Like today. Or any day in September.

If your adjusted gross income is $79,000 or less, regardless of your filing status, you can still use the IRS' no-cost online Free File option. The eight tax software companies participating this year will be available through Oct. 15.

Regardless of how your choose to finally file, getting the extension out of the way now means you won’t have to worry about the October deadline sneaking up on you.

More tax monthly moves: If the changing of seasons and, fingers crossed, cooler weather gives you some added tax energy, you can find more September Tax Moves over in the ol' blog's right column.

That list is, as usual, just beneath the digital clock counting down to the aforementioned October extended filing deadline. Don't worry. I'll nag remind you of the due date in next month's moves to make post.

For now, though, there's plenty to take care of this September.

Advertisements

🌟 Explore Prime for Young Adults 🌟
The text link above is an affiliate ad. If you click through and then buy a product, I receive a commission.