Question

Mark and Sue are married and U.S. citizens with valid Social Security numbers. The Malones received wages and a large amount of taxable income not subject to withholding. Mark did not have health insurance coverage for 2019 and Sue had health insurance coverage through her employer. The Malones have a $2,500 balance due on their joint return and want advice on how to prevent a balance due next year. They do not anticipate a change in their sources of income and amounts received next year.

One of the ways Mark and Sue can prevent having a balance due next year is to use the Tax Withholding Estimator at IRS.gov and then adjust their withholding.


(A) True

(B) False

Answer 1

A) True

Step-by-step explanation:

The Malones should first read IRS publication 505 (2019), Tax Withholding and Estimated Tax. Then they should use the IRS Tax Withholding Estimator.

The IRS always recommends that everyone should use the Tax Withholding Estimator to avoid any unpleasant surprises, but I believe only a small percentage of taxpayers actually takes the time to use. When you are an employee, most of your tax withholdings are covered, but when you have income that is not subject to withholding, then it's a good idea to use this tool. It is always easier to pay your taxes in small installments, and not wait until the last day to pay a large lump sum.