I have always tried to show my clients why they have a tax balance due. For some it is a mystery and demoralizing to always owe money each year. I have created my own Payroll Tax withholding analysis spreadsheet to analyze current year, and prior year(s) so that they can see where the weakness is. Sometimes it's their own paycheck, sometimes it's their spouse. Sometimes, it due to a job change and they didn't understand the impact of their choice on their Form W4.
For years, I have used the Federal two-year comparison to show trends, changes, and individual components that make up their total tax calculation. It has been a great help, clients love it and I believe it helps me stand out in helping my clients see me as a valued advisor, instead of just a data input.
This year, I have gone one step further. I use the Pro Series W2 Payroll Summary, 1099 Summary, and other relevant income sources as input to show them how each of their income sources is either withholding enough or drastically coming up short. It's a pretty simple excel spreadsheet and many clients are thanking me for helping them better understand their payroll tax withholding rates vs their tax return effective rate, so they can better understand and fix their withholding weak spots. This tax w/h report is now one of my most requested reports from my clients. They want to take home and use it to correct their Form W4.
I would be glad to show you an example if interested.
It's late, and I'm tired, not sure if I have explained this concept very well.
Thanks for the idea to - Include a payroll tax withholding rate vs tax return effectiveness analysis report -. We are changing the status to "Open for voting" since it is no longer considered "New".
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