Fall brings cooler weather and time to clean up the lawn, organize the garage and get ready for winter. The Internal Revenue Service wants to remind taxpayers that it is also a good time to review their taxes.
“Taking a few minutes to make sure what was taken out of your paycheck matches your projected tax bill can save you headaches next year,” said IRS spokesman Michael Devine. “If not enough was withheld, you will owe tax for 2013 and may have to pay a penalty.”
Changes to your income, like taking a second job, having a spouse go back to work, or receiving income not subject to withholding, such as rent, dividends, interest or capital gains, can alter the amount that needs to be withheld.
“It’s also very important to check your withholding if there were changes in filing status or that involve adding or losing exemptions, like marriage, divorce, birth or adoption of a child,” said Devine.
With the help of current pay stubs and a copy of last year’s tax form, the “Withholding Calculator” on IRS.gov can help you know if the right amount is being withheld. Information from this automated calculator can then be used to revise a W-4 to give to your employer.
Keeping track of receipts and other records throughout the year can help you avoid problems at tax time.
“If you itemize, you should keep receipts, invoices, mileage logs, canceled checks and other records to support deductions or credits you claim on your tax return,” Devine said.
Generally, tax records should be kept for three years. But some documents; such as records relating to a home purchase or sale, stock transactions, IRAs and business or rental property, should be kept longer.