IRS Warns Over Tax Withholding, Announces Higher Retirement Contribution Limits
As 2023 draws to a close, the Internal Revenue Service (IRS) has issued a call to action for taxpayers to reassess their withholding settings, a proactive step that could spare many from unforeseen tax bills or overpayments in 2024.
In a November 3rd advisory, the IRS underscored the importance of this review, emphasizing that a year-end adjustment, although late in 2023, could prevent the dual extremes of an inflated refund or an unexpected balance due when filing taxes. This guidance comes with the revelation that approximately 70 percent of taxpayers traditionally over-withhold, leading to refunds that essentially amount to interest-free loans to the government.
“Although it’s best for taxpayers to verify withholding early in the year, an adjustment made in the final weeks of 2023 could still help to avoid an unexpected result, such as a big refund or a balance due, when filing taxes next year,” the agency said.
Conversely, the sting of under-withholding is not to be underestimated. Taxpayers who
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