Real Estate Is Taxing

Microphone (Shure MV7): Hello, everyone.

Welcome to the episode.

This was a little bit of an unplanned
episode we're at mid year, and this is a

fantastic point to check in on something.

And I wanted to make
sure we didn't miss it.

So consider this episode,
your formal reminder.

To take a look at your withholding for
the year, or if you're self-employed.

Take a look at your year to
date earnings and what you have

sent in for estimated payments.

And see where things stand.

Right?

We are halfway through 2024.

I'm not really sure how that happened, but
we've got half a year left to fix things.

If our withholding or the amount
of taxes we're planning for

is a little bit off course.

So what made me think of this?

I was working on a return this week.

Where the taxpayers W2.

The amount of withholding.

Was only 4%, 4%.

And I was like, oh no,
this is, this is troubling.

Um, the other thing was their W2
was lower by a pretty decent chunk

this year, from the prior year.

And in prior years.

Withholding has been around 14, 15%.

Perfect.

So in talking to the client.

One of the big changes this year and
the reason for the reduction in income.

Was that difference was
normally from a bonus.

And the company didn't
do so well last year.

So they didn't do bonuses.

If you have ever worked somewhere
where you may get a bonus.

You'll notice there tends to
be more tax withheld from them.

That's incredibly common
that's standard practice.

So in these earlier years, when a large
chunk of the income was from bonuses.

Then there was extra tax
being withheld pretty much.

So everything sort of leveled out.

For this year.

No bonus.

No extra withholdings.

And I'm not sure what changed if
there was a change on their w four.

Um, the taxpayer swears, they
didn't submit anything new.

But as we know that form changed a
couple years ago, I think it was in 2020.

So, if you haven't updated your
w four in a while, it might be

worth it to take a look at that.

So they weren't sure what had changed
or why the amount would only be 4% and

they hadn't noticed it during the year.

So long story short.

In these earlier years, if it had
been quite low in earlier years, it

wouldn't have been noticed really
because we have that extra amount held.

But for this year, we were only at 4%.

And so this is the reminder to you.

That you should take a look
at your most recent pay stub.

And divide the amount of federal
withholding by the amount of

wages and see where you are.

If you are under 10%.

Dig into that a little bit and
find out if that seems correct.

The lowest tax brackets, 10%.

And you can end up with an
effective rate of less than that.

There might be a reason for it.

There might be some tax
planning where maybe you've

made tax payments on your own.

Your spouse is self-employed.

Something like that.

Perfect.

But consider this your reminder
to take the most recent pay stub.

And look at that percentage
and just see where things are.

If they seem really low, look into it now.

It is always better to find
these things and course correct

midway through the year.

Then make it all the way
to the end of the year.

Additionally, I know you guys are
not going to want to hear this.

Um, but you have to, and I'm
sorry, you can, you can blame me,

but maybe you'll thank me later.

If you open a paycheck.

And, you know, something
has changed, right?

Maybe your role changed or there's
a new payroll processor at your job

or whatever, if anything has changed
or even if it didn't, but if you

open a paycheck and do you notice.

At the amount of taxes taken out
seems much lower than it was before.

Question that and look into that.

So if there's a sudden change and you
didn't request anything to change.

That warrants a little more investigation.

If you haven't looked at
the updated w four form.

It used to be, you just
picked a number, right.

And you picked a number and the number
you picked determined if they held more or

less from your taxes based on exemptions.

Now it has several questions it's
designed to be more accurate, but what

it is actually done is created a little
bit of a dumpster fire and confused.

A lot of people.

And a lot of people have outdated
information on there now.

So take a look at this new form.

It'll ask for things like if you have
more than one job, Um, because it's not

uncommon that if someone has more than
one job, that they don't withhold tax at

one of the places or between the two of
them, they might end up over withholding.

It's going to ask about.

Children, it's going to
ask about or dependence.

It's going to ask about additional income.

So, if you haven't updated your w four.

In several years with your job.

Talk to HR.

So this is your reminder.

Look at your pay stub, review it.

See what percentage are
withholding is that.

You can even take a look at that
compared to last year and see if

you seem like you're on track.

If you're way off course.

If nothing else has changed.

And, you know, last year
you received a huge refund.

You might want to have less taken out.

But whatever you do, just take a minute.

And look at that most recent pay stub.

And adjust accordingly.

So.

I hope someone found this helpful.

I hope it was a good reminder
to someone out there.

And if you haven't been
withholding enough, don't panic.

Uh, you can adjust it.

You can just adjust for the rest
of the year and get back on track.

I hope everyone has had a
fantastic first half of the year.

And we are on track to have
an even better second half.

As always.

I will talk to you guys next week.

I hope everyone has a fantastic weekend.