It’s summer and while you may be thinking of barbecues and vacation you should also be thinking about taxes, yes taxes. Everyone thinks about taxes at the end of the year but really you should be performing a mid-year tax checkup now to prevent problems later.
A Mid-Year Tax Checkup will help you identify appropriate tax planning strategies. Here are some simple tips for individuals and business owners (many apply to both) to ensure that tax time is a breeze in February.
- Give to charity – Charities suffer the most in the summer because people just simply don’t think about them at this time of year (people most often give during the holidays). Contributions are tax deductible so it’s a win-win.
- Evaluate your estimated taxes – Look at what you’ve paid via your April and June 1040-ES filings and see whether your schedule is still on track. If not, you can adjust your upcoming September and January estimated tax payments.
- Get organized – Now is the time to get your receipts, log books and other tax related essentials in order. If your finances and records are unorganized at this point, chances are they will be a full blown mess come tax time and it will be harder to remember certain things from early in the year.
- Contribute to your retirement – The earlier you contribute to your individual retirement account, either a traditional IRA or a Roth, the sooner the account starts earning money. Also, double check if your employer offers a 401(k). If they do and you haven’t enrolled, now is the time to get the info and enroll. The money you contribute comes out of your paycheck before taxes are calculated, which gives you an immediate tax break on your income.
- Check your withholdings – Double check your withholdings to be sure you don’t end up owing at tax time. Take stock of your tax situation from last year and if there have been any major changes (new child, spouse lost his/her job, etc..) you may need to adjust your withholdings.
- Double check tax law – The tax code changes pretty much yearly. It’s important to keep up to date with the changes to be sure you are aware of any that may apply to you. Summer is still early enough to make any necessary changes.
- Hire a Tax Professional Advisor
Summer is a great time to hire a tax professional because now that the rush of the tax season is over they have more time to devote to new clients. It also gives you time to determine whether he or she is a good fit for your needs. Tax season is not the time to vet professionals. A good tax experience can be attained with tax planning.
A Mid-Year Tax Checkup will give you enough time to make changes to all your finances for the current year in order for an efficient and accurate tax return.
If you are ready to hire a professional Tax advisor to help you plan your tax strategy, contact us and we will assist you with a mid-year tax checkup to start planning your tax strategy.
Marc Enzi CFP®, EA