Last tax season more than a million taxpayers got nasty surprises when filing their income tax returns. In prior years, they received small refunds or owed just a little. However, due to changes in the tax withholding tables, many owed $10K or more.
Tax planning can do two things for you:
- Create a sense of certainty in your tax liability and peace of mind
- Reduce your tax burden by taking advantage of planning opportunities.
For people, who are largely wage earners with simple situations, tax planning can be as simple as having our firm spend 30 minutes ensuring that your tax withholding will be sufficient by year end. If it is sufficient, that’s great. But if your withholding will come up short, we can help you manage the tax liability to avoid adding penalties to a balance due.
For people with more complex situations such as business owners, rental owners or people with substantial investment income, we can prepare projected tax returns. This typically involves a few hours of collecting and entering your current year information into our tax planning software.
We can tell you where you’ll be tax-wise by year end and help you make planning decisions to minimize that liability. After the year is over, pretty much all opportunities to reduce your taxes are gone. Here of some examples of strategies we have used with other clients in the past:
- Set-up a pension plan and contributions for business owners
- Purchase state tax credits such as the Virginia Land Preservation Credit
- Defer income to future years where tax rates may be lower
- Accelerate expenses to be deductible in the current year
- Make year end investment portfolio changes to reduce or eliminate capital gains
There are many other possibilities. All of them involve understanding your unique circumstances and crafting a customized solution to fit your needs. Contact SK CPAs & Business Advisors PLLC and let us help make your tax situation less taxing!