Tax season is over, but that doesn’t mean you should put off tax planning until next year. Most people forget about taxes after they file their return, but there’s no better time to start tax planning than right now. What if you planned all year and made conscious decisions to minimize your tax burden? What if with just a little foresight, you could simply work smarter rather than harder for change in your pocket.
If you’re waiting until March, or even early April, every year to think about income taxes, you’re causing yourself unnecessary anxiety and may ultimately be losing money.
To a lot of people, “tax planning” means scheduling an evening for the annual ritual of gathering tax documents. If you have a complex financial situation, maybe you put away those documents that start coming in January and don’t think about your forms and schedules until you must.
When you finally do sit down to begin preparation of information and gathering of documents, you may be filled with a sense of dread the whole time you’re working. Will you owe money? What am I missing?
That’s the first reason why tax planning should be a part of your year-round financial planning: Your tax preparation won’t be a hurried, anxiety-ridden task. When you wait until the last minute, at least three things can go wrong:
- You’re missing one or more tax documents — or maybe handfuls of receipts, if you’re itemizing.
- You missed an opportunity to defer or avoid taxes (some deductions require action before the end of the year).
- You have some kind of emergency like illness or an injury, and you’re unable to make the deadline.
What you do now through 2019 can make a difference when you file your taxes next year. There are many ways to maximize your deductions, but some require action before the year is over. If you are taking these steps throughout the year, you won’t find yourself scrambling to make charitable contributions or contribute to your retirement plan in December.
The Benefits of Tax Planning
The benefits of year-round tax planning include:
Most of us are in a constant state of financial planning, maybe you’ve even set a budget for yourself and your family. But do you factor in your taxes to your income and expenses? Expenses can have a large impact on your income taxes. Regular attention to your taxes can lead to smarter business decisions. Besides making purchases with taxes in mind, you can create monthly and quarterly reports that track your income and expenses so that your quarterly estimated taxes are closer to the mark than if you just guessed – or worse, didn’t pay them.
Tax planning can help you take advantage of the available tax benefits and deductions. Also, accounting applications make tax planning much easier. You can run customizable, pre-defined reports in seconds, and you can watch the ebb and flow of your income and expenses in real-time.
Keeping Everything Organized
If you are planning all year, you’ll have everything kept in a neat little file ready to go by the time tax season rolls around. You won’t cause yourself unnecessary stress, searching through piles of paperwork to find receipts from way back in May — or worse, losing out on deductions because you can’t find them. If you keep tabs on your files all year round, you’ll simply be able to hand over your documents at tax time.
Making Changes to Withholding
If you got a large refund this year, you may want to reconsider how much taxes are withheld. Maybe you want a bigger paycheck all year and a smaller refund. You can always re-file with your payroll department throughout the year.
The Verdant Difference
Planning is the key to successfully and legally reducing your tax liability. At Verdant, we go beyond tax compliance and proactively recommend tax saving strategies to maximize your after-tax income. We make it a priority to enhance our mastery of the current tax law, complex tax code, and new tax regulations by attending frequent tax seminars.
Businesses and individuals pay the lowest amount of taxes allowable by law because we continually look for ways to minimize your taxes throughout the year, not just at the end of the year.
We recommend Tax Saving Strategies that help you…
- grow and preserve assets by keeping Uncle Sam out of your pockets.
- defer income so you can keep your money now and pay less taxes later.
- reduce taxes on your income so you keep more of what you make.
- reduce taxes on your estate so your family keeps more of what you’ve made.
- reduce taxes on your gifts so you can give more.
- reduce taxes on your investments so you can grow your wealth faster.
- reduce taxes on your retirement distributions so you can retire in style.
Here’s just a few of the Tax Saving Strategies we use…
- Splitting income among several family members or legal entities in order to get more of the income taxed in lower bracket.
- Shifting income or expenses from one year to another in order to have them fall where it will be taxed at a lower rate.
- Deferring tax liabilities through certain investment choices such as pension plans, contributions, and other similar plans.
- Using certain investments to produce income that is tax-exempt from either federal or state or both taxing entities.
- Finding tax deductions by structuring your money to pay for things you enjoy, such as a vacation home.
- Remember, we work for you, not for the IRS. Many of our clients save many times the fee in reduced tax liability through careful planning and legitimate tax strategies.
Don’t worry about knowing tax laws and tax forms, that’s what we’re for! Tax season may be over, but we would love to see you all year. Make an appointment today to begin your journey to an easier tax season.