W4, W2, Social Security, Internet guru's

Hello Tax Stars * !* !* !

Because I am seeing a trend with w2's and clients not having the correct amount of tax taken out, I am sending out this email.

In 2020, the W-4 form changed to help individuals withhold federal income tax more accurately from their paychecks. Your employer and.or their HR department should have informed you of this so you could update your W4.

I have on my website the link to the IRS W-4 calculator. I have sent emails in the past explaining why you would use this tool twice a year to make sure you are on point with your withholding.

Co-worker Advice

As I have said many times before, there is no 1 size fits all formula for business or financial strategies. Co-worker do not always understand what their tax preparer is doing, or even if what they are doing is legal. Also, No HR employee can give you tax advice. They are not allowed for liability purposes. What works for someone may not work for you.

This is why the Tax Star Mobile motto is TAX Season IS YEAR ROUND. ASK A PROFESSIONAL FIRST BEFORE ACCEPTING 3RD PARTY ADVICE AS PURE GOLD.

There is this rumor going around about turning off your withholding for half the year, or parts of the year. You do not do that without speaking to your tax person first, or before checking your tax bracket on the IRS site. There are tax strategies in place when a person stops or reduces withholding.

Internet guru's

There are some influencers who tell you that you have the option of switching back and forth between a W2 employee and a 1099 contractor. There are labor laws that every employer must follow or they will face federal and state fines, and the taxpayer could have tax liability depending on the situation.

You cannot switch back and forth all willy nilly. The scope of work and criteria must be met before changing how you get paid.

Find out more information here https://www.taxstarmobile.biz/post/the-difference-between-a-employee-w-2-and-a-contractor-1099

The Retired

Your social security becomes taxable by percentage when you have another income source. This is explained on your social security statement with a worksheet to help see what percentage of your social security will be taxable.

Wages from a job, pensions, investment income, etc will make your social security taxable.

For individuals that have a combined income of :

• $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits.

• more than $34,000, up to 85 percent of your benefits may be taxable.

So when I tell you to increase your withholding and you don't, do not get surprised when you owe taxes at the end of the year.

Find out more about social security taxation here

https://www.ssa.gov/benefits/retirement/planner/taxes.html