People don’t typically look forward to tax season, but they definitely look forward to their tax return. Getting that money back makes the annoyance of filing worth it. However, sometimes people owe on their taxes. This can be frustrating, especially if you don’t know why. Today in the LongSchaefer blog, we’ll explain some reasons you might owe on your taxes.
Reasons You Might Owe on Your Taxes
Here are some come reasons you might owe taxes this year:
Not Withholding Enough
When you first start your job, you’ll be given a W-4 to fill out. When filling this out you can claim dependents and allowances. The more of these you claim, the less taxes will be taken out of your paycheck. But, if you claim this incorrectly, you’ll end up not having enough taxes withheld throughout the year. The boost in your paycheck might be nice, but the taxes will be assessed at the end of the year. You’ll have to pay back what you owe based on the correct withholding.
Not Making Changes to Your Filing Status
Sometimes people neglect to make the necessary changes to their filing status. For instance, if your child is now self-sustaining and living on their own, you can no longer claim them as a dependent. Certain events, like getting married or getting divorced, can also have similar effects to your tax filing status. These factors can affect your tax return and possibly cause you to owe money. Make sure you keep up with any necessary changes in your filing status.
Not Reporting Freelance Income
If you start a side job as an independent contractor, whether it be freelancing or working for Uber, you have to report this income and consider making estimated tax payments if withholdings elsewhere can’t be adjusted to accommodate. If you’ve neglected to pay taxes on these side jobs throughout the year, you’ll probably have a tax bill at the end of the year that requires you to pay the missed taxes.
Choose LongSchaefer as Your Tax Professional
If you’re looking for someone to take care of your taxes this year, LongSchaefer is your solution. Our tax advisors help you file your taxes, which in turn may minimize your tax burden or maximize your return. They can also help you understand why you owe taxes this year, and what you can do to prevent it from happening next year. Contact us today for more information and see how we can help you.