For new parents, information is coming from every direction – feeding times, car seats, sleep schedules, strollers, child development and of course ... taxes. What most new parents do not consider is that this little bundle of joy just complicated their tax situation!
Whether you are a new parent, grandparent, or know someone who is expecting, here are some tax tips to consider:
If you have not already done so, now is the time to review your tax situation and make an estimated quarterly tax payment using Form 1040-ES. The second quarter due date is now here.
Normal due date: Thursday, June 15th 2017
Remember you are required to withhold at least 90% of your current tax obligation or 100% of last year’s federal tax obligation.* A quick look at last year’s tax return and a projection of this year’s obligation can help determine if a payment might be necessary. Here are some other things to consider: Underpayment penalty. If you do not have proper tax withholdings during the year, you could be subject to an underpayment penalty. The penalty can occur if you do not have proper withholdings throughout the year. So a quick payment at the end of the year may not help avoid the underpayment penalty. Who is impacted. If you paid additional tax last year with your tax return filing, have a business that flows profits to your personal tax return, or have a change in your filing status pay attention to this reminder. You may be a candidate for potential estimated tax payments. W-2 withholdings have special treatment. A W-2 withholding payment can be made at any time during the year and be treated as if it was made throughout the year. If you do not have enough to pay the estimated quarterly payment now, you may be able to adjust your W-2 withholdings to make up the difference.