Last tax season more than a million taxpayers got nasty surprises when filing their income tax returns. In prior years, they got 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 certainly 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 us 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 couple 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 others in the past:
- Pension plan setup 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 unique solution to fit your needs.
Contact us and we can make your tax situation less taxing.