Importance of Year-Round Tax Planning

Tax season is fast approaching, and you need to be prepared. What you do throughout the year may affect your business’ tax liability next year. Year-round tax planning can help reduce your tax burden or even possibly increase your refund.

Here Are Five Simple Things You Can Do:

• Organize Your Tax Records: Create a system to keep track of important tax documentation and other related information. This may help your tax provider find overlooked or hidden deductions to help save you money.
• Identify Your Filing Status: Your filing status determines filing requirements, eligible credit deductions, and standard deductions, but changes throughout the year may make you applicable to more than one status.
• Know Your Adjusted Gross Income: Your adjusted gross income (AGI) determines the amount of taxes you pay. Prepared tax planning can help reduce your AGI, reducing the amount you pay.
• Check Your Withholding: Federal taxes are paid throughout the year, meaning it’s paid as you earn your income. It’s recommended to update your W-4 withholding form yearly according to your personal and financial situation.
• Save for Retirement: Retirement savings can also help lower your AGI. A traditional IRA plan allows you to save for your future retirement while lowering your taxable income at the same time.

Hiring a professional to keep track of your taxes year-round can greatly benefit and simplify the process for you. Contact Lakeesha V. Browne, CPA for any of your accounting, tax, and advisory needs.