How to lower next year's tax bill and avoid another surprise

Five steps for next year

1. Run the IRS Tax Withholding Estimator. It's free at IRS.gov/W4App. Have your latest pay stubs, your spouse's if you file jointly, and last year's return. It shows whether you're on track and can fill in a new W-4 for you.
2. Give your employer a new W-4. Use Step 2 if you have two jobs or a working spouse. Use Step 4(a) for other income, such as interest, dividends or retirement income, and Step 4(c) for a set extra amount from each paycheck.
3. Make estimated payments for income with no withholding. The 2026 payments go in on April 15, June 15, September 15, and finally January 15, 2027. Paying 100% of last year's tax across those dates (110% if last year's adjusted gross income was over $150,000) usually avoids the penalty.
4. Use the tax breaks you already qualify for. Contributions to a 401(k) through payroll must be made by December 31. Contributions to an IRA can be made until the April filing deadline. Business owners can lower profit with costs they can prove.
5. Check again in the fall. By October you know most of the year. There's still time to raise withholding, send a larger fourth payment, or make a decision that has to happen before December 31.

You can lower next year's bill while the year is still open. Most of these moves stop working once December 31 passes, so earlier is easier.

What the fall check-in looks like

Bring last year's return, your latest pay stubs, and your year-to-date profit if you have a business. We compare what you've paid in so far with the tax the year is heading toward. Then we decide together what to change: your withholding, your last estimated payment, a retirement contribution, or a business decision that has to happen before the year ends.

For a business, we start from books that match the bank statements. When the books are behind, catching them up comes first, so every number in the plan is real.

What we do for you

We find out why you owe, check the withholding and estimates with you, keep the books for a business, prepare the next return, and plan the year so April brings no surprise. Steven Palmieri holds no CPA license, and for a surprise tax bill the practice is the Tax CFO alternative.

Two kinds of work need a license of their own. An audit or review report on financial statements is signed by a CPA firm, and speaking for you in an IRS exam or collection case takes an enrolled agent or an attorney. If you need either one, we'll tell you on the first call and point you to someone who does that work. Payroll is setup only: we set it up with the provider you pick, and you run each payday. You can read more about this on our disclosures page.

Questions about next year's tax bill

Which decisions have to happen before December 31?

Anything that must be paid or done inside the year, such as 401(k) contributions through payroll, owner wages from a company, and most business purchases. IRA contributions and the January estimated payment can come later.

Does changing a W-4 fix side income?

It can. If you have a W-2 job too, extra withholding through Step 4(c) can cover the tax on your side income, and it counts as paid evenly through the year. If you have no W-2 job, estimated payments do the same work.

How much should I pay in estimates?

Either 100% of last year's tax (110% above $150,000 of adjusted gross income) or 90% of this year's expected tax, whichever is smaller, split across the four dates. On the call, we work out the actual amounts with you.

What should I gather before the fall check-in?

Last year's return and your latest pay stubs. If you have a business, bring your profit for the year so far. Books that are behind are no problem. We'll start there.

Plan next year with us

Send a short note, and we'll set up a free 30-minute call to set your withholding and estimated payments for next year.

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