by Barry Steiner CPA (Former IRS agent)
Managing a tax burden has never been more difficult, whether you’re managing your individual tax rates, the rates on your investments, the taxes on your privately held or pass-through business, or the income of executives and shareholders at your company. Lawmakers have been aggressively using the tax code to try to get the economy back on track, and there are now more ways than ever to reduce your tax liability – however, all of them take planning.
9. Always monitor your withholding
Check your withholding and estimated tax payments now while you have time to fix a problem. If you’re in danger of an underpayment penalty, try to make up the shortfall through increased withholding on your salary or bonuses by claiming fewer withholding allowances. A bigger estimated tax payment can still leave you exposed to penalties for previous quarters, while withholding is considered to have been paid at an even rate throughout the year. To avoid penalties, pay estimated taxes equal to 110 Percent of your estimated tax liability.
Your Weekly Tax Jokes
“Technically, you’re not paying taxes. According to the Bush administration, your bank account is being liberated.” – Jay Leno
“Today the IRS gave some guidelines on how to avoid getting audited. Number one, don’t list deductions that will raise a red flag. Number two, make sure you file on time. Number three, don’t make any stupid anti-war speech at the Academy Awards.” – Jay Leno
“The IRS now says you can deduct weight loss plans off your taxes. You can write it off because the government has officially declared obesity a disease. And if it’s a disease, you can deduct medical expenses. That shows what a difference an administration can make. See under Bush, obesity is a disease. Under Clinton it was just sexy.” – Jay Leno
“At last night’s debate, Democrats attacked President Bush saying his tax cuts for the rich bankrupt the middle class. And Bush said ‘Hey, thanks for the new slogan.’” – Craig Kilborn
Click here to see previous Tax Tips from Barry R. Steiner. Check back next Wednesday for another free tax tip – one tip for each week of the tax season until April 17th.
Barry R. Steiner is a Chicago-based CPA and former IRS Agent. He’s the author of the best-selling income tax guide “Pay Less Tax Legally” and was a regularly featured guest on ABC-TV’s “Good Morning America”. Barry has maintained his own tax practice for the past 40 years, and most recently has authored two e-books: “Infernal Residue” and “Kiss My IRS”. More info at KissMyIRS.com »