The Benefits of Using Tax Projections and Tax Planning Services
Tax season is still a few months away. But if you’re not thinking about and planning for it already, you could be missing out on some extremely important benefits. In fact, simply filing your return without proper tax planning and tax projections could result in you paying thousands more in taxes in some cases. That’s why we do far more for our clients than simply preparing their tax returns; we can provide you with tax projections and help you to plan for the upcoming tax season, so that you can make important financial decisions that could reduce your tax liability. Here are just a few ways that our tax projections and tax planning services can help you.
Be Financially Prepared with Tax Projections
If you’ve never used tax projections before, you’ve probably had the unpleasant experience of filing your return and being shocked at what you owe. In some cases, people end up owing such a significantly higher amount that they’re unable to afford to pay their tax bill. It’s a difficult situation to be caught in, but getting a professional tax projection can help you to avoid it.
We can look over your current finances and give you a reliable estimate of what you’re going to owe when it comes time to file. This can help you to begin planning and saving for that tax bill now, rather than scrambling to find the funds before the tax deadline. And, if necessary, we can help you to work with the IRS to establish a payment plan for any amount you still can’t cover.
Making Smart Tax Moves before the Year Ends
As you know, the taxes you owe are best on your income and expenses during the calendar year. If you utilize professional tax planning, you can get a clear view of your current financial situation now, while you still have time to make adjustments before the end of the year. This might include making additional deposits into retirement accounts to reduce your tax liability, making charitable contributions, and so on. If you don’t get these projections and start planning for your taxes before the year ends, by the time you run those numbers, it’s typically too late to do much to change your tax situation in any way.
Planning for the Coming Years
Expert tax planning doesn’t just look at this year’s tax return though. Our CPAs can help you to get a better picture of your taxes and finances over the next several years, and help you to determine the best financial options to reduce your tax liability. For example, did you know that “bunching” your itemized deductions can save many people thousands of dollars in taxes?
“Bunching” refers to the practice of paying two years’ worth (or as close as reasonably possible) of your usual itemized deductions in a single year. This gives you an extremely high amount of deductions that you can then itemize on your tax return for that year. The following year, you would have a much lower amount for itemized deductions, and would take the standard deduction amount.
As an example, let’s say that you usually have a total of $22,000 in itemized deductions each year (this would include charitable contributions, medical expenses, property taxes, etc.). This is lower than the standard deduction of $24,000, so you just take the standard deduction every year. However, if you “bunched” those itemized deductions into a single year, you could feasibly deduct $44,000 one year and take the standard deduction the following year. This would allow you to deduct a total of $68,000 between the two years, when you would normally only be deducting $48,000 over the course of two years.
Obviously, this is a very simplified example, and some deductions are easier to “bunch” than others. Bunching properly can save you a great deal on your tax returns, but it does take careful planning, so you need to work with a qualified tax planner to ensure you do it right.
Make Timely Business Purchases
The concepts mentioned above apply to businesses just as well as they apply to individual tax returns. However, for businesses, the stakes can often be much higher. It’s important that you are timing your large business expenses properly to get the greatest advantage on your tax return and keep your company’s financial future secure. We can help you to make those timely business decisions and help you know what to expect for the coming tax year for your business.
If you want to advantage of all the benefits of tax projections and tax planning, contact us. We’ll sit down with you and paint a clear picture of your current tax situation, then work with you to get the best possible outcome on your upcoming tax return. While there’s no guarantee we can reduce what you’ll owe, we can help you to make smart investments and plan for a better financial future. Contact us to schedule your consultation today.