2023 was the year on the unexpected escalating income and under withholding.
Interest rates jumped up in 2023, along with dividends. Mutual fund companies, followed the great adage of buying low and selling high. Capital gains were up significantly for a number of clients.
All of these clients saw their monthly/quarterly statements and made no move to make extra estimated payments or increase their withholding. So, they are ending up with a larger than expected tax liability. Some just could not believe that they made as much money as they did.
I asked them if they reinvest interest, dividends, and capital gains; all stated that they did. So, I had to explain that they earned the money and then reinvested to create more interest, dividends and capital gains, making the liability just a little larger.
They understood, even if they did not like the results…