The Fed’s dual mandate is full employment and fending off inflation. Friday’s job report indicates what some consider to be full employment – how will the Fed react to inflation rates – and will they continue at their current pace through 2022? Annex Wealth Management’s Dave Spano and Derek Felske discuss.


Review & Update Your Income Tax Withholding 

We operate under a “pay as you go” tax system. This means that both Federal and State governments generally require that you pay income tax throughout the year as your income is earned. There are two common ways to satisfy your tax liability for any given year: 

  1. Withholding
  2. Quarterly estimated tax payments (also known as “estimates”), which are due April, June, September and January.

This week’s MoneyDo is to review and update your income tax withholding. Your first step will be determining how much you need to pay in. To avoid underpayment penalties, look at your tax liability from the prior year. You’re required to pay in at least 100% of that number, or 110% if your adjusted gross income is over $150,000. Alternatively, you’ll avoid underpayment penalties if you pay in at least 90% of your current year’s federal tax liability. This is known as reaching “safe harbor.” In addition, each state has their own safe harbor rules. Payments should generally be made each quarter. 

So, take a few minutes and consider how much you’re withholding for tax from your paycheck. Consider these points: 


  • If you’ve been receiving a large refund every year when you file your taxes, you may have the ability to withhold less during the year.
  • Withholding less will allow access to your funds sooner than waiting for your tax return to be processed and your refund received.
  • Conversely, if you find yourself owing taxes every Tax Day, you may want to increase your tax withholdings.
  • If you’re an employee, you can do increase your tax withholding by adding additional withholding on a W-4. Talk to your HR department.
  • If you’re a retired individual, you can increase withholding from taxable retirement distributions or other sources of retirement income.

Life Changes: 

  • If your filling status changed, make sure you update your withholding amounts, because your tax tables will be changing.
  • For example, if you filed “single” in the prior year, and will be filing married in the current year, the tax brackets for which you are taxed on will widen, which might allow more income to be taxed at lower rates. Changes in your life often have an impact on how much you need withheld for the year.

Income Changes: 

  • When income changes significantly, make sure your withholding elections or estimated payments are still appropriate.
  • If your income for the current year is greater than the prior year, and you’ve met “safe harbor” as described above, you do not have to pay the additional tax until you file your return.


Have there been any significant income changes for you compared to the prior year?  Have you been under/over withholding in the past? If so, now is the time to adjust your tax withholding or estimated payment amounts. Making these changes earlier in the year allows for more time for your course to be corrected.  

If you’re looking for assistance in determining how to make sure you’re withholding enough, find an advisor you can trust to help with your tax planning. 


*Annex Wealth Management does not provide specific tax or legal advice and this information should not be considered as such. 

You should always consult your tax or legal advisor regarding your own specific tax/legal situation. 


We took this question to Annex Wealth Management’s Planning Team: 

Thanks for contacting us. Congratulations on being able to consider helping your son out. You’re wise to ask about the best way to gift funds to your son. Part of the answer involves understanding the gift tax rules, so let’s start there. 

The tax code allows each individual taxpayer to gift up to $16,000 per recipient per year without filing a gift tax return, as of 2022. Previously the amount was $15,000. This is called the annual gift tax exclusion.  

Based on the annual gift tax exclusion described above, if you’re married, you and your spouse may give a combined $32,000 to your son in 2022. As a further option, if your son is married, you could also give his spouse $32,000 as well, which would increase the gift to $64,000 without needing to file a gift tax return. 

Now, fear not. Since the intended amount of your gift exceeds $32,000 or even $64,000, you can still make a full give of $150,000 if you choose to do so. However, by exceeding the annual exclusion for 2022, then a gift tax return should be filed. The good news is that typically, this is a filing requirement and there likely is no gift tax due.  

In addition to the annual exclusion, the tax code provides a lifetime gift and estate tax exemption. As of 2022, the amount is $12.06 million per person. This means a married couple can gift up to $24.12 million during their lifetime and/or at death above and beyond the annual exclusion.  

Filing a gift tax return simply reports the amount given over the annual exclusion so the IRS can apply the gift to your lifetime exemption, reducing your remaining exemption. As long as you have exemption to use during your lifetime, you will not owe any gift tax.  

Another alternative to outright gifts is whereby you finance the purchase, acting as the lender, and taking a mortgage in return so that your son makes payments to you over time. This strategy can also incorporate you forgiving payments, thereby making gifts over time rather than all at once. If you’re interested in learning more about that strategy, we encourage you to talk to an advisor you can trust or an Estate Planning Attorney for more information. 

We hope this helps.