|
How planning now can yield big savings next April
Unless you happen to be an accountant, you probably don’t like to spend a lot of your time thinking about taxes. Let’s face it. Even CPAs know that there are many things more interesting than tax planning and compliance. Yet while taxes may seem a bit tedious, you may be interested in the possibility of keeping more of your hard earned money. It just might be worth your time to take a little closer look at some current opportunities to minimize your upcoming tax bill.
When is the right time to plan for tax reduction? You might be surprised to know that proactive tax planning throughout the year can lead to big savings come tax time. In fact, many opportunities for tax reduction require action in the year preceding the filing of your tax returns. What can you do now to reduce your tax bill next April?
First, ensure you are compliant and paying your taxes on time. If you haven’t paid sufficient withholding, you might want to update your W-4 to withhold more to adjust for any deficiencies. If you were given a raise at the end of last year, you may not have adjusted your withholding amounts – meaning you might not be withholding enough of your income to cover your tax liabilities. If you are married filing jointly, there may be other variables in the equation as well. Bonuses should be considered as well as any other income you may have such as rental property, interest and dividends, and stock sales etc. It is important to know all of your reportable income and its effect on your taxes in advance of filing next year’s return.
Next, be sure to avoid penalties. Remember that even if you file an extension, all unpaid taxes are still due April 15. If you owe money, it is critical that you pay any unpaid liabilities even if you don’t file the return timely. Also be sure that you file all returns even if you don’t have the money to pay.... Read More
|
