PHOENIX ― Fall is the time of year that brings cooler weather and the chance to get outside, clean up the lawn or organize the garage or attic.
The Internal Revenue Service wants to remind taxpayers that fall is also a good time to conduct a review of their tax situation. To take into account the latest tax changes, check your withholding status and start organizing your records.
“A careful study of your income and expenses for 2015 may result in a bigger refund or less taxes to be paid come tax time next year,” Bill Brunson, an IRS spokesperson said. “If you plan to itemize deductions on your tax return, you’ll need to keep documentation – so, it only makes sense to start good recordkeeping habits. And, to be knowledgeable of the credits and deductions for which you may qualify, be sure to visit IRS.gov.”
Take a few minutes to check your withholding to make sure what is being taken out of your paycheck matches your projected taxes.
If not enough is withheld, you will owe tax at the end of the year and may, in some cases, have to pay a penalty. If too much tax is withheld, you will lose the use of this money until you get your refund.
You should check your withholding if there are significant personal or financial changes in your life. Many of these changes involve the addition or reduction of exemptions or a change in filing status that alters the tax liability, even if there has been no change in income.
These changes include: marriage, divorce, birth or adoption of a child, purchase or sale of a home, or retirement.
Other changes that can alter the amount that needs to be withheld include taking a second job, having a spouse go back to work, unemployment compensation, or receiving income not subject to withholding, such as rent, dividends, interest or capital gains.
With the help of current pay stubs and a copy of last year’s tax form, users can check to see if they are withholding the right amount.
“You can avoid headaches at tax time by keeping track of your receipts and other records throughout the year,” Brunson added. “Just a little effort in this area during the year saves you time and work when organizing and completing your return.”
In most cases the IRS does not require you to keep records in any special manner.
Normally, you should keep all documents that may have an impact on your federal tax return. Such items would include bills, receipts, invoices, mileage logs, canceled checks – or any other proof of payment – and any other records to support deductions or credits you claim on your tax return.
Generally, tax records should be kept for three years, but some documents, for example, records relating to a home purchase or sale, stock transactions, IRAs and business or rental property, should be kept longer.
This relatively new application lets taxpayers pay their tax bills or make estimated tax payments directly from checking or savings accounts without any fees or pre-registration.
“It saves time and gets you out of traffic,” Brunson said. “IRS Direct Pay is just part of our effort to add more online tools to help taxpayers. It allows you to make a payment from the convenience of a home computer—no need to drive to a local IRS office just to make a payment.”
Introduced in 2014, more than a million tax payments have already been made through the IRS Direct Pay system.
With IRS Direct Pay, taxpayers receive instant confirmation that the payment has been submitted, and the system is available 24 hours a day, 7 days a week.
Bank account information is not retained in IRS systems after payments are made.