There are only 3 weeks left until the April 15th filing deadline. It has been a busy season with mixed results for some clients. I think that it is safe to say that the 2017 Tax Cuts and Jobs Act has proven to be as far reaching as it was promised. While the results are not always expected, they are starting very important conversations regarding tax planning. Most people think that tax planning is only for the wealthy who are trying to get out of paying taxes, but that is not true. Most taxpayers have options available to them that would help to manage the amount of tax that they pay. The options range from utilizing a Health Savings Account (if eligible) to pay medical expenses with money that is not taxed, to simply adjusting the amount of withholding that is coming out of your paycheck each pay period.
One question that I like to ask a client is, “what is your tax goal? Do you want to breakeven or get a large refund?” Then I explain how to go about each option and provide answers as varied as my clients. So I am asking you, “What is your tax goal?” and more importantly, “how are you going to get there?”
If you owed more money than you expected, here are the three options available to you:
- 1 – Leave everything the same and plan on owing again for 2019
- 2 – Change your withholding; have more money taken out before you see it
- 3 – Make quarterly estimated payments to the IRS
If you received a large refund here a couple of things to consider:
- 1 – You just gave the government more money than necessary during the year, interest free.
- 2 – The IRS would prefer that taxpayers fall into a $2,000 range of owing or getting a refund. Although there is no penalty assessed for a refund over $1,000 there is a penalty assessed if you owe more than $1,000 for more than one year in a row.
My free advice this Friday: Let’s talk! Tax planning is not just for the wealthy.