Personally, I find that most of these tax planning opportunities fall into just a couple of categories; deferring gains and speeding up deductible expenses. For the real procrastinators, there are deductions that can be taken right up until the due date of your tax return.
I find that there are really two simple things that you can do before the end of the year to help you with your planning.
First, a lot of people use tax preparation software, so it is fairly simple to run your current year to date tax information through the software that you used last year. By using your December paystub, property tax statements, charitable contributions, you should have a pretty good idea or where you will end up. Doing this “dry run” can help you avoid a heart attack when you do your actual tax return. I find that sometimes an employer will change payroll companies, and as a result, your withholdings may change, the result can be for the better or for the worse. Consider spending a few minutes to not be caught off guard.
A second idea is to pick up the phone an call your tax and financial team. Your team of professional financial advisors will ask always ask you what has changed during the year that may have an impact on your tax return. Regardless of whether you use tax software or have a professional prepare your taxes, your current year estimated tax payments were based on your taxes last year. The most important factor in tax planning, as well as the most common, are changes that have happened in your life that impact your tax return.
There are numerous events in your life that will have a dramatic impact on your tax return that inevitably happen to most taxpayers. Some examples include getting married, buying a house, having children and investing for your future. There are also unfortunate events that will also have an impact on your tax return; a divorce, death, catastrophic event or medical issues are examples.
Remember that during the year, when major events happen, remember to inform the financial team that you have enlisted to ensure your financial security. Ultimately, the success of your financial team is based on your success. So take these two new year-end tax ideas to heart
Post by Doug Zandstra CPA EA www.dougzandstra.com