Taxes. Like em or not, they are with us, both for public and governmental good. Preparing for year end taxes makes great sense for both individual taxpayers and businesses. Protecting income and saving tax expenses are good reasons to follow some valuable year end tax tips.
Reasons to Pay Attention to Tax Deadlines
Paying attention to year end tax deadlines offers these benefits:
- Planning ahead gives every tax preparer adequate time to assemble and put all the right documents in good order, thus avoiding mistakes from rushed last-minute actions.
- The biggest reason is that late or incorrect filing can produce expensive penalties. So, don’t procrastinate. Put a plan together to meet deadlines and solve issues that may arise during your tax preparation.
- Early tax planning can help achieve increased benefits.
- Paying taxes on time helps taxpayers pay less taxes. Seek the tax deductions and credits that may be available to you, and which can be potentially missed if tax preparation is rushed.
- Quicker tax processing and refunds can result.
- Correct and on-time tax filing builds credibility and trust for individuals and businesses. This can contribute to an improved credit score which can be important for making key purchases and getting loans approved as quickly as possible.
- Know that the IRS is willing to work with individuals and businesses to set up payment plans if money is owed.
Year End Tax Advice
Use these year end tax tips to get the greatest benefits from your tax planning and preparation:
- Set aside some good time for planning. It is wise to gain a good understanding of your current tax situation and to consider what circumstances may change during the next year. That can be especially useful if it looks like tax rates will increase next year.
- Consider deferring income into the next year. For example, you may be able to defer a personal year end bonus into the next year.
- Consider accelerating deductions into the current year.
- Increase personal withholdings to cover any anticipated tax shortfalls. The IRS has a useful calculator that can help you determine whether or how to adjust your withholdings.
- Take action to maximize retirement savings since saving for retirement can lower your tax bill.
- Take any required distributions from traditional IRA’s.
- Examine any potential year-end investment moves and their possible tax consequences.
- Examine your capital gains. Any securities that have declined in value can be sold off to balance against gains to reduce your tax bill.
- Put funds into a 529 college savings plan to help fund a child’s education. These often qualify for state tax deductions.
- Utilize flexible spending accounts. Money used in these accounts avoids both income and Social Security taxes and the funds that are unused at year’s end simply go away.
- Take some last-minute deductions if those will be helpful in reducing your tax liability.
- One of the most important year end tax tips is to get professional assistance in tax planning and tax filing.
Using these year end tax tips can benefit individuals in good and bad years. Similarly, good tax planning is vital for businesses of all sizes. And getting professional assistance from a qualified tax professional will help you make all the right moves.
Get Expert Accounting and Financial Assistance
Contact Doerhoff & Associates, CPA, based in Jefferson City, MO for professional accounting and financial assistance that you can count on. Doerhoff & Associates has one goal in mind, to provide comprehensive business accounting services designed specifically for your success.