Tax Review

Today is the due date for your second income tax installment if you make estimated tax payments.

As we approach the end of the first half of the year, it is a good time for the others who rely on our employers to withhold income tax to review our withholdings so far. Refer to your last pay stub for year-to-date earnings and withholdings. You can adjust your W4 accordingly.

According to the IRS publication 505 (irs.gov) to avoid penalty, your withholding must be either 90% of your 2008 tax liability or 100% of your 2007 tax liability (Line 63 of Form 1040). The exception is if your 2008 income exceeds $150,000 when you need to cover 110% of your 2007 tax liability.

Of course, using this calculation is easiest if you have completed your 2007 tax returns. Those on extension have until October to complete their 2007 tax returns and thereby qualify for a stimulus check.

'til later