| The close of the third quarter of a tax year is a | | | | see about $400 ($800 if married filing jointly) |
| perfect time to perform a quick check on our | | | | more in their net pay ($400/$800 less withheld |
| rate of tax withholdings and the state of our | | | | for income taxes) for the entire year. If |
| financial record keeping. Most of the year is now | | | | however, you receive more than one paycheck |
| "under" our belt; we have a good picture of | | | | and EACH has reduced withholdings, you need to |
| possible income, deductions, and credits. More | | | | calculate and increase your withholding rate to |
| important though is the fact that there is still time | | | | compensate for your growing shortfall BEFORE |
| left in the calendar to make adjustments that | | | | December 31, 2009. Those receiving unearned |
| could help minimize any "tax shocks" in January. | | | | income in the form of taxable distributions need |
| If you receive a regular salary, confirm that | | | | to also check their total voluntary withholdings |
| amount of your tax withholdings cover your | | | | against projected taxes that will be owed for the |
| projected taxable income for 2009. With the | | | | year. People who, for whatever reason, are not |
| recent Stimulus Recovery modification in payroll | | | | affected by employer or voluntary withholdings |
| tax withholdings, many people will find that while | | | | will be able to claim the $400 as a refundable tax |
| they currently have more disposable income, the | | | | credit when they file their 2009 tax return in |
| total withholdings for 2009 have been decreased. | | | | 2010. |
| This means that on December 31, 2009, less | | | | If you claim business deductions for travel, |
| money has been taken out of your paycheck to | | | | entertainments, or other qualified expenses, are |
| pay for your income taxes! Too little withholdings | | | | your records current? Do you have an odometer |
| during the year will result in you OWING more on | | | | reading from January 1, 2009 that will help you |
| December 31, 2009. For many people living from | | | | track your accumulated mileage this year? Do |
| paycheck to paycheck, the sudden discovery that | | | | you have a daily log that will support your |
| you actually owe say, $200 or $400 more in | | | | business deduction claims? It is easier to |
| taxes, will come as an unwelcome surprise. For | | | | reconstruct those records NOW than wait until |
| others, that substantial 2008 tax refund will NOT | | | | next year when you complete your tax return. |
| replenish your checking account in February, 2009. | | | | Expect the IRS to more aggressively review |
| Check your payroll stub now. You still have time | | | | taxpayer's claims for business-related deductions |
| to lower the number of exemptions on your IRS | | | | in 2009. The burden of proof is placed on the |
| Form W-4 you file with your employer or | | | | taxpayer to prove the expenses they claim on a |
| voluntarily withhold a small, manageable amount | | | | tax return. |
| from your regular salary to offset your expected | | | | Remember that 2009 personal exemptions; a |
| tax bill. For more information, use the Tax | | | | newborn child, a new spouse, or conversely, a |
| Withholding Calculator that is available on the IRS | | | | formal divorce, are based on your state of affairs |
| website, at irs.gov. | | | | as of December 31, 2009. If a child is born on the |
| If you collect two or more paychecks, check | | | | last day of the year, you can deduct a personal |
| your total withholdings. The Federal Stimulus | | | | exemption for the entire year. If you finalize your |
| Package under the guise of the Making Work Pay | | | | divorce on December 31, you file as a single |
| Tax Credit lowered the amount of payroll | | | | taxpayer for the entire year. Any of these |
| withholdings in April, 2009. This could affect how | | | | circumstances will have a significant impact on |
| little or how much you owe in taxes for the year. | | | | your income tax bill for 2009. |
| A taxpayer with a single paycheck will typically | | | | |