Whether you are the type of person always scrambling to get your personal taxes in on time, or perhaps the super-organized one who wants to make sure no stone is left unturned, may we suggest taking stock of your tax preparation situation mid-year to avoid any last-minute surprises next April.
While you won’t have all your records and information on hand as of yet, you will know the basics of your financial situation that can help you connect with the tax experts at tax preparation firm, E&Y Agency Inc., for some early advice. Your tax expert can help you conduct a simple forecast to determine where you might fall for the upcoming year and what you can do now to change course in your favor. While all tax changes are not yet finalized, they will have a good handle on the ones that might rear up and cause changes.
start your tax preparation early with these simple checks.
- Life Changes: If you have undergone a life change, it may impact your status at tax time. If you’ve gotten married, divorced or are now widowed; received an inheritance; earned a promotion; or possibly sold a rental property, you will want to let your tax expert know. While some may benefit your tax situation, others may put you into a new tax bracket, changing your tax course. An expert can help you forecast the impact of such life changes on your personal taxes.
- Income Withholding: There are really two reasons to check the amount being withheld on each of your pay checks. The first is when you consistently owe the government at tax time. It’s a great idea to increase the amount being withheld, which will help bring that amount owing closer to zero. On the other hand, if you consistently get large refunds at tax preparation time, you may want to consider reducing the amount being withheld, increasing the amount you receive on your pay checks. Try this calculator from the IRS to help you identify the optimal amount of tax you should be withholding to more closely break even in April.
- Understand Eligible Deductions: Every state has a unique set of deductions for which you might, or might not qualify. Plus, there are annual changes that might impact your tax preparation planning. Consider reviewing last years’ tax changes to ensure you are up to date. For example, last year saw the removal of your ability to claim moving expenses, tax preparation fees and wealth management fees… to name a few. There are some deductions that are likely to change for the 2019 tax year, including medical deductions. Consider creating a bunching strategy that will help you have enough qualified expenses to meet some of the itemized deduction thresholds by compiling as many of your allowable expenses as you can into one tax year. If this is new to you, you might have to withhold claiming some allowances this year to have a stronger bundle for 2020.
- Take Advantage of Retirement Accounts: Tax-free Retirement Savings Accounts are a great option to defer some of your income and lowering your tax bracket. A 401(k) is the most common retirement savings account and allows the deferral of up to $18,000 pre-tax for those under the age of 50 and $24,000 for those 50+. If you are not contributing the maximum allowed each year, take a look at how you can increase your input.
Talking with a tax expert and forecasting for the upcoming tax season is a smart choice, especially for those who typically owe. Some simple planning and smart financial moves could save you from having to write a check next April. Let’s talk about your individual situation and make a plan.
About E&Y Agency
E&Y Insurance and Tax Agents are dedicated to giving our clients the products that provide quality protection and value pricing and the peace-of-mind in times of crisis. Our goal is to establish a successful partnership with our clients, our staff members, and our partner companies. Our success is measured by our clients choosing us because they believe in our ability to meet or exceed their expectations of price, service, and expertise. Call us now to talk about your insurance or tax needs!
