This week, I’m talking about  year-end tax planning to help you take advantage of opportunities to potentially lower your taxes this year. 

Today, I’m talking about fixing your withholding. This is something you’ll want to look at annually as your income changes, but this is especially relevant in 2020 where your income may be substantially different than it was in 2019. 

Withholding the right amount on your income - like salary, bonuses, or IRA withdrawals - is important, because you don’t want to overpay or underpay taxes. While you don’t want to give more money to the government than is necessary in the form of too much withholding, the real problem are potential penalties for underpaying taxes on your withholding. The good news is that you still have time to correct the issue before the end of the year through increased withholding on your salary, bonuses, or retirement plan distributions. 

So if your income changed a lot in 2020 - especially if you’re fortunate enough to have an increase in your income in 2020, be sure to review your withholding and make sure it’s appropriate to avoid underpayment penalties.

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip.

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