Episode 86: In this episode, Timalyn talks about tax withholding and why it is so important to review throughout the year. She explains how the pay-as-you-go tax system works, who should be paying attention to their withholding, and how a simple checkup now may help avoid tax bills, penalties, and interest later.

What is tax withholding?

The United States has a pay-as-you-go tax system. That means taxes are supposed to be paid throughout the year as income is earned.

For most employees, employers withhold taxes from each paycheck and send those payments to the IRS on the employee's behalf.

Who needs to pay attention to withholding?

Most people think about withholding when it comes to wages, but it can apply to other types of income as well.

Timalyn discusses withholding for wages, pensions, retirement distributions, Social Security income, and other sources of income that may create a tax liability.
What happens when there is not enough tax withheld?

When enough tax is not being paid throughout the year, taxpayers often end up owing when they file their return.

Depending on the situation, they may also face penalties and interest. This can include an underpayment of estimated tax penalty if they did not pay enough throughout the year.
What if you are self-employed?

For taxpayers who do not have an employer withholding taxes, estimated tax payments may be required.

These payments are generally due four times a year and help taxpayers stay current with their tax obligations throughout the year.

Timalyn reminds listeners that they are making payments throughout the year, not filing tax returns every quarter.

How do you know if you are on track?

The IRS offers a free Withholding Estimator that can help taxpayers determine whether they are having enough withheld or paying enough through estimated tax payments.

Timalyn also shares that she has free educational resources available that walk taxpayers through common withholding situations and filing statuses.

How can you avoid penalties?

One of the easiest ways to avoid penalties is to review your withholding before the end of the year.

Timalyn explains that taxpayers generally want to make sure they have paid enough throughout the year to avoid underpayment penalties and unnecessary interest charges.What should you do next?

Timalyn encourages listeners to do a withholding checkup and review their current tax situation.

Whether the income comes from wages, a pension, retirement distributions, Social Security, self-employment, or investments, making adjustments now may help avoid problems later.

Need Tax Help Now?

If you would like help reviewing your withholding or calculating estimated tax payments, you can schedule an appointment through the Bowens Tax Solutions website.

If a paid consultation is not the right fit, Timalyn also offers free educational resources through her YouTube channel and Tax Tips with Timalyn.

As we conclude Episode 86, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, YouTube, and many other podcast platforms.

Remember, Timalyn Bowens is America's Favorite EA, and she's here to fill the tax literacy gap, one taxpayer at a time. Thanks for listening to today's episode.

For more information about tax relief options or filing your taxes, visit https://www.bowenstaxsolutions.com/.

If you have any feedback or suggestions for an upcoming episode topic, please submit them here: https://www.americasfavoriteea.com/contact.

Disclaimer: This podcast is for informational and educational purposes only. It provides a framework and possible solutions for solving your tax problems, but it is not legally binding. Please consult your tax professional regarding your specific tax situation.