IRS Tax Tip: Fall is a Good Time to Review Your Tax Situation

A news release from the Internal Revenue Service:

Fall brings cooler weather and time to clean up the lawn, organize the garage and get ready for the winter. The Internal Revenue Service wants to remind taxpayers that fall is also a good time to review their tax situation. 

Withholding

 “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 Spokesperson Peggy Riley. “If not enough was withheld, you will owe tax for 2013 and may have to pay a penalty.”

Changes to your income

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, or interest, can alter the amount that needs to be withheld.

“It’s also very important to check your withholding if there are significant personal or financial changes in your life that involve adding or losing an exemption such as marriage, divorce, birth or adoption of a child, purchase or sale of a new home, or retirement,” said Riley.

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 the automated calculator can then be used to revise a W-4 to give to your employer.

Recordkeeping

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,” Riley said.

Generally, tax records should be kept for three years, but some documents, for example, records relating to a home purchase or sale, stock transactions, IRAs and business or rental property, should be kept longer. 

For more information on what types of records to keep, see Recordkeeping at IRS.gov.