Why do I owe taxes this year? Here’s 3 common reasons

( NEXSTAR ) – It ’ s that time of year again — you ’ ve received your tax forms — which means it ’ s fourth dimension to start filing your taxes. Americans are now turning to their tax software or specialist ( if they haven ’ t already ), hoping to hear they ’ re getting a refund .
unfortunately for some, they ’ ll be writing the IRS a determine quite than the other way around .
not sure why you owe taxes this year ? There are a few common reasons, largely stemming from changes in your life sentence, that can lead to you owing .

Employment status

One of the most celebrated is a change in your employment. When you start a new problem, you have to fill out a kind W4. Basically, this form determines the come of taxes taken out on each of your paychecks. By putting a 0 on your W4, the most amount of taxes will be taken, while putting a 1 means less will be taken. Having the most measure of taxes taken out will lead to a refund, according to the IRS.

Those who are freelance may besides suffer a “ tax shock event ” if they didn ’ thyroxine pay estimated taxes, according to Mark Steber, foreman tax information military officer for Jackson Hewitt Tax Services. Estimated tax is used to pay Social Security and Medicare taxes, ampere well as income tax, because you don ’ deoxythymidine monophosphate have an employer already withholding these taxes for you, the IRS explains .
If you didn ’ t pay estimated taxes this year, you ’ ll likely have to pay while filing this year, says Lisa Greene-Lewis, a CPA and tax technical with TurboTax .

other bonuses, like hiring or retention bonuses, can lead to you owing taxes. While some bonuses have minimal withholdings, it may not be enough to offset the true tax rate, Steber notes. Bonuses count as supplementary income, according to TurboTax, meaning they are subject to federal withholding tax at a 22 % flat rate .

Child Tax Credit

The Child Tax Credit payments may besides be to blame. The payments received throughout 2021 were advanced payments on your tax recognition, Greene-Lewis says. If you were overpaid, the IRS says it ’ s likely you may owe money back .
Payments in 2021 were based on previous years ’ returns, so some situations — like an addition in income during 2021 or a child aging out of the profit — might lower the come owed to the taxpayer .
Do you plowshare detention of a child or children ? That could have an impact, excessively. Steber explains that if it isn ’ t your year to claim a pendent, but you received promote child tax credit payments, you ’ ll have to pay those monies back .

Cryptocurrency

And if you tried your handwriting at cryptocurrency death year — and got lucky — you could find yourself owing the IRS. Big cryptocurrency gains should be reported on your taxes. Without withholdings or estimated payments, you ’ ll owe, says Steber .
This is circumscribed to those who sold a cryptocurrency, according to the IRS. If you purchased some this year, but did nothing else with it, you don ’ t need to report it .
once you sell it, and realize a gain or loss, you need to report your crypto activeness, CNET explains. You ’ ll owe taxes on any capital gains .

Owe taxes but can’t pay? You have options

Those that end up owing the IRS money are encouraged to pay on meter. If you can ’ t pay the entire measure when you file, that ’ s OK. The IRS offers different requital plans .

first, you can agree to pay the wide sum within the adjacent ten days. If you need more prison term, you can select a short-run payment plan to pay your federal taxes within 11 to 120 days .
Need even more meter ? The IRS offers a third option : an installation agreement. here, you can pay the balance due in monthly payments .
Visit the IRS for more information about these payment plans.

The tax season formally began on Jan. 27, and while they aren ’ triiodothyronine officially due until April 18 ( here ’ south why ) the IRS is encouraging Americans to file early .

source : https://www.peterswar.net
Category : Finance

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