global Tax 5 Tips for Year-Round Tax Planning July 20, 2023 April may be but a distant memory, but should we be putting our tax thoughts aside until next year? Simply put – NO! Here are five tax tips for year-round planning. Tax season may “officially” end in mid-April, but that isn’t a reason not to think about taxes for the rest of the year. Things that occur early in the year could be forgotten by the time we are thinking about taxes for the year. We want to avoid anything that could potentially cause the IRS to waive a red flag in your direction. Here are some tips to be mindful of the entire year: Stay organized with your records. Develop a system that works for you to keep important information together. There are software programs available or if you aren’t computer-friendly, have a paper filing system that is organized. And, regardless of your system, don’t just dump everything into one big file without organizing it into separate files. Adjust your income taxes after life events- In the event you experience a life-changing event – marriage, death, divorce, addition to your family (sorry, pets don’t count!), retirement – remember to check with your tax preparer as to how the event may impact your income taxes. Account for other changes like new jobs, business closings- A new job, starting or closing of a business, perhaps changing from a W-2 employee (employer withholdings) to a 1099 (no employer tax withholdings) employee or vice versa, or even a change of your job structure without a change of employer (perhaps going from an in-office worker to one that works remotely or now has travel involved). If you experience one of these events, talk to your tax practitioner as to how your income taxes may be affected. Revisit your estimated tax liabilities- Life changing events can result in a change of not only the amount of your tax liability but also could result in the need to make estimated tax payments throughout the year. If you don’t make sufficient payments or have adequate taxes withheld, you could be subject to underpayment penalties for failure to pay sufficient taxes. Your tax professional can do an analysis to guide you in an effort to avoid any underpayments. Keep your tax preparer up to date- Finally, as most importantly, don’t wait until next tax season to make your tax preparer aware of changes in your life. Be proactive – communicate sooner rather than later. It will benefit both you as the taxpayer as well as your tax professional. Need help assessing your individual situation? We can help. Contact us.
