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The 2023 tax season is on the horizon, and it's time to take proactive measures to avoid any surprises. Whether you're a salaried employee, a freelancer, or a small business owner, planning for your taxes is crucial. It can be overwhelming, especially if you've had changes in your income, made mistakes in your previous tax filings, or if you're self-employed and haven't been making quarterly estimated payments. But don't fret, this guide will provide you with some useful advice on how to prepare for the upcoming tax season.

Why You May Owe This Tax Season

There are several reasons you might end up owing taxes this season. Understanding these reasons can help you avoid them in the future and better plan your finances.

Salary Increases and W-4 Adjustments

If you've received a pay increase but did not adjust your W-4 form accordingly, you could owe taxes. The W-4 form determines how much federal income tax is withheld from your paycheck. If you don't adjust it following a pay increase, you may not be withholding enough taxes, leading to a possible tax bill.

Filing Exempt

Another reason you might owe taxes is if you filed as exempt for any portion of the year. When you claim exemption, no federal tax is withheld from your paycheck. However, this doesn't exempt you from paying taxes, and you could end up with a hefty tax bill at the end of the year.

Owing Taxes for Previous Years

If you owed taxes for the previous year and didn't pay them, this could increase your tax bill for the current year. It's crucial to settle any unpaid taxes as soon as possible to avoid penalties and interest.

Self-Employment Taxes

If you're self-employed and haven't been making quarterly estimated payments, you might owe taxes. As a self-employed individual, you're responsible for paying your own taxes, including the self-employment tax, which covers Social Security and Medicare.

Addressing Your Tax Bill

So, what should you do if you can't pay your tax bill by tax day? Don't panic. There are options available to help you manage your tax debt.

Filing Form 9465

One option is to file IRS Form 9465, the Installment Agreement Request. This form allows you to enter a payment plan with the IRS, enabling you to pay your tax debt over time instead of in a lump sum. This can help you avoid a levy and potentially higher interest rates in the future.

Get a Free Tax Estimate

As part of your tax planning strategy, consider getting a tax estimate. A tax estimate can give you a rough idea of how much you may owe or get back, allowing you to plan accordingly. And the good news is, free tax estimates are available starting today!

To get started with your tax estimate,

Preparation is key when it comes to tax season. So start saving and planning today to make the upcoming 2023 tax season as stress-free as possible.

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