Year-End Individual Tax Planning
November 3, 2014
Jeremy A. Johnson, CPA
With three quarters behind us, it is a great time to evaluate where you are tax-wise!!
November is here, and the first 10 months of the year give you an accurate look at where you may stand come filing time. This is a great time to make any tax planning changes needed to put you in a more favorable tax position. Below are a few key items to consider:
- Changes to your household (marriage, births, adoption, etc...)
- Employment changes (salary increase/decrease, unemployment, etc...)
- Started a business
- Increased itemized deductions (new residence, medical/dental expenses, mortgage refinance, etc...)
- 401k activities (early distributions, rollovers, etc...)
With the proper tax planning, these life events can be handled in a way that minimizes lump-sum tax liabilities. Before making any changes, be sure to talk with your qualified tax preparer or a CPA to discuss the best way to handle these situations. This individual should be able to, with the proper software and experience, estimate how these changes will affect your year-end tax liability and develop a plan to lessen surprises upon filing.
However, some steps can be taken proactively based on your 2013 tax filing. Did you owe a significant amount to the IRS? Or, did you receive a larger than expected return? You may be able to have a short visit with your HR administrator to make minor changes and update your W-4. Just by changing your allowances claimed and/or stating an additional amount to be withheld (W-4, line 6), filing your 2014 tax return could be more manageable. By taking the necessary steps now, you could save yourself interest, penalties, and future headaches. Based on your comfort level, you still may want to consult with your tax preparer or a CPA. Remember, tax professionals are there to assist you year-round and not just between the months of February and April.