The Importance of Reviewing Your Tax Withholdings After Filing

As tax season wraps up and you submit your tax return, it may feel like your tax responsibilities are complete. However, one critical step that many people overlook is reviewing their tax withholdings after filing. If your tax withholdings aren’t adjusted appropriately, you could end up overpaying or underpaying throughout the year, leading to either a smaller refund or an unexpected tax bill.

In this article, we’ll explore why it’s essential to review your tax withholdings after filing and how doing so can save you money in the future. If you're in Rochester, NY, or Greece, NY, and want help adjusting your withholdings, Nacca & Capizzi is here to assist.

Why You Should Review Your Tax Withholdings

When you file your taxes, it’s important to understand how much money has been withheld from your paycheck over the year. Tax withholdings are designed to approximate the taxes you owe, and they are deducted by your employer throughout the year. If too much was withheld, you could be giving the government an interest-free loan. If too little was withheld, you could face a large tax bill with penalties when you file next year.

Nacca & Capizzi can help you review your tax withholdings, ensuring you’re not overpaying or underpaying taxes. Contact us at (585) 225-9290 or visit www.naccacpas.com to schedule a consultation.

1. Overpaying vs. Underpaying: The Consequences

Overpaying Taxes:
If you’re consistently getting large refunds each year, it might be a sign that you’re overpaying throughout the year. While getting a big refund feels nice, it means you’re essentially giving the government an interest-free loan. Instead of waiting for your refund, you could use that money more effectively by adjusting your withholdings to better match your actual tax liability.

Underpaying Taxes:
On the other hand, if you’re underpaying throughout the year, you could be hit with a large tax bill when you file your return, along with possible penalties and interest. It’s essential to find the right balance to avoid both situations.

Nacca & Capizzi can help you adjust your withholdings to avoid both overpayment and underpayment. Reach out today to review your tax situation!

2. Life Changes Impact Your Withholdings

Changes in your life—such as getting married, having children, buying a home, or changing jobs—can all impact your tax situation. If you don’t update your withholdings after these changes, you could end up paying more taxes than necessary, or worse, not paying enough.

For example:

• Getting married: This can impact your filing status and your withholding allowances.

• Having children: Children can qualify you for tax credits, which may affect how much you should withhold.

• Switching jobs: A change in income may require you to adjust your withholdings to ensure you're paying the right amount.

At Nacca & Capizzi, we offer comprehensive tax advice and will help you update your withholdings after any major life changes. Contact us today to get started.

3. The IRS Withholding Calculator

One of the easiest ways to review your withholdings is to use the IRS Withholding Calculator. This online tool allows you to input your financial information to determine whether you need to increase or decrease your withholding. However, even with this tool, it can be challenging to understand the full impact on your finances.

Nacca & Capizzi can simplify this process. We’ll review your financial situation and help you make the right adjustments to your withholdings, ensuring you're neither overpaying nor underpaying.

Call us at (585) 225-9290 or visit www.naccacpas.com to get personalized assistance.

4. Why Withholding Adjustments Matter for Your Cash Flow

Properly adjusting your tax withholdings helps keep your cash flow in check throughout the year. By avoiding excessive withholdings, you can free up more money in your paycheck to invest, save, or use for other financial priorities.

For small business owners, adjusting your tax withholdings can help avoid large tax liabilities at year-end, making it easier to plan for other expenses. If you overpay throughout the year, you might be missing opportunities to reinvest that money into your business or personal finances.

Nacca & Capizzi can help small business owners in Rochester, NY, and Greece, NY, review their payroll tax withholdings and ensure they have the right financial structure in place for success. Schedule a consultation with us today.

5. How to Adjust Your Withholdings

Adjusting your withholdings is relatively easy, and it starts by submitting a new W-4 form to your employer. This form allows you to change the number of allowances, or exemptions, that impact how much tax is withheld from your paycheck. You can also request that a specific dollar amount be withheld each paycheck if you prefer to control the exact amount.

Nacca & Capizzi can assist you in completing and submitting your W-4 form and provide additional tax planning advice to ensure that your withholding strategy aligns with your financial goals. Whether you're filing as an individual or managing a small business, we can guide you through the process.

Call us today at (585) 225-9290 or visit www.naccacpas.com to get help with your withholding adjustments.

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6. The Benefit of Regular Tax Reviews

Once you’ve adjusted your withholdings, it’s important to review your tax situation regularly. Life changes, income fluctuations, and unexpected expenses can all impact your tax situation, so revisiting your withholdings every six months can help you stay on track.

Nacca & Capizzi offers ongoing support throughout the year, not just during tax season. We can help you stay proactive by offering regular tax reviews and financial planning advice, ensuring that your tax strategy is always aligned with your personal or business goals.

Stay on Track with Nacca & Capizzi

Tax season doesn’t end when you file your return. Reviewing your tax withholdings is an essential step in ensuring your finances are in order for the coming year. Whether you're adjusting your withholding based on life changes or aiming for a balanced cash flow, Nacca & Capizzi is here to help.

Let us guide you through the process of adjusting your tax withholdings and optimizing your financial situation. Schedule a consultation with Nacca & Capizzi today at (585) 225-9290 or visit www.naccacpas.com to get started.

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Disclaimer: This article provides general information on tax withholdings and should not be considered as personalized tax advice. Always consult with a professional like Nacca & Capizzi to address your specific situation.