Tax checkups are necessary. Just like a beloved vehicle, you need to periodically inspect your tax system to make sure it is operating properly. Knowing that there has been a significant tax reform this year, it is especially important that you are conducting tax checkups.
One aspect of your taxes that should be reviewed is your withholding from wages. Tax reform laws were passed in late 2017, and there was a considerable amount of confusion among employers regarding the amount of taxes to withhold in 2018. Because it was such a huge change, many have been concerned about the revised and more complicated W-4s. In some cases, employees are not withholding enough which can be a big problem in the long run. This problem can be avoided by conducting a tax checkup.
While most people will see an overall tax reduction as a result of the tax reforms, the amount of their refund or tax due hinges on the amount of pre-payments (which include withholding and estimated tax payments). If you count on a refund each year, it might be appropriate to have us office run a mid-year tax projection, or a tax checkup, to ensure that the refund will be as expected.
If you are a married couple with two incomes, an individual with multiple jobs, or you are a wage earner and self-employed, you will likely have the most trouble deciding the best prepayment amount. We specialize especially with those self-employed and would be able to extend help if needed.
There are a number of other circumstances that can impact your taxes, and you probably should not wait until tax time to see the results. It isn’t always negative, as you could be missing opportunities to decrease your prepayments and obtain more cash flow. With mid-year tax planning, you may be able to take steps to mitigate the tax impact of certain events and thus avoid unpleasant surprises before it is too late to address them. Here are some events that can significantly impact your tax liability:
If you anticipate or have already encountered any of the above events or conditions, it may be appropriate to consult with us, preferably before the event and definitely before the end of the year. Visit our contact us page to set up an appointment!