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\u2026and tips on how to do it.<\/p>\n\u2026and tips on how to do it.<\/p>\n
The IRS may have granted us a reprieve for filing our income taxes this year, but we hope you\u2019re well into your preparation for 2020 income taxes \u2013 or finished with them. Tax planning shouldn\u2019t be a task on your to-do list every April. It should start January 1.<\/p>\n
You won\u2019t know what legislation Congress will pass before December 31 that will affect your taxes, but the planning and recordkeeping you do throughout the year will help minimize last-minute panic and frustration. It can also reduce your total tax obligation.<\/p>\n
There are other reasons why you should treat tax preparation as a part of your overall financial planning. As the year progresses and you monitor your income and expenses, you can make adjustments that will have impact on your tax bill.<\/p>\n
If you\u2019re filing an individual return, you need to learn how major life events like marriage, children, unexpected unemployment, a new side gig, or a change in home ownership will affect you, and how to adjust accordingly. If you have a small business, this attention to money in and money out is even more critical. You don\u2019t want to come to the end of the year and discover that your income is significantly higher than the total of your expenses, and you haven\u2019t paid nearly enough in estimated taxes.<\/p>\n
Waiting until the last minute is unwise for other reasons. For example, you may learn that you\u2019re missing critical documents like receipts and official tax forms from employers. Further, what happens if an emergency comes up in early April and you\u2019re unable to finish? Yes, you can file for an extension, but that also requires that paperwork and possibly a payment be submitted by the deadline.<\/p>\n
Year-round tax planning gives you the opportunity to control what you can while anticipating what could happen. Sometimes, tax legislation comes early in the year, like the American Rescue Plan did in 2021. You probably already know how that will affect your 2021 taxes. If you\u2019re conscientious about your bookkeeping throughout the year, you\u2019ll be in a better position to gauge how both tax law changes and your own unfolding financial situation might alter your tax obligation.<\/p>\n
Here\u2019s the best answer we can give you to that question: Treat every day like it\u2019s April 14. You don\u2019t have to scrutinize every single expense and determine its tax implications (though you should, for major purchases), but there are a number of ways you can prepare.<\/p>\n
Consider using a financial software program or website, or at least Excel.<\/strong> If you\u2019re filing individually, you can start tracking your income and expenses in a free service like Mint or pay to use, for example, Quicken or Simplifi. These applications allow you to import transactions from your financial institutions, categorize them so you know what is tax-related, and run reports that can help you in your tax preparation.<\/p>\n Develop a manual system for organizing your taxes.<\/strong> If you don\u2019t want to go digital, visit an office supply store and invest in suitable paper or a ledger book, file folders, and anything else that you can dedicate to only tax-related documentation. Keep all receipts in one place.<\/span><\/p>\n Keep abreast of tax legislation.<\/strong> Tax law changes are reported in newspapers and magazines, on websites, and on television news. Pay close attention, especially to those that will affect you.<\/p>\n Change your withholding if necessary.<\/strong> If you\u2019re a W-2 employee and you\u2019re getting large refunds, talk to a benefits representative at your company about changing the number of allowances you claim. Refunds are nice, but you could be putting that money to use yourself during the year.<\/p>\n Look at IRS tax forms.<\/strong> If you\u2019re taking on a side gig or starting your own small business as a sole proprietor in 2021, you\u2019re going to want to acquaint yourself with the IRS Schedule C. You can look at the 2020 version now to see what information you\u2019ll have to supply. Pay close attention to the types of expenses that are deductible and track them carefully. You might even look at the instructions.<\/p>\n Consult with a professional.<\/strong> This is an especially good idea if you\u2019re starting a new business this year and\/or you\u2019ve experienced life changes that could affect your taxes. We can help you come up with a plan to prepare for tax filing throughout the year. With that in hand, we\u2019d also be happy to do your tax preparation for you when the time comes. Contact us, and we\u2019ll schedule some time to meet.<\/p>\n You may have just recently filed your 2020 income taxes, but it\u2019s past time to start planning for 2021. Ask us how.<\/p>\n Starting a side gig or sole proprietorship in 2021? We can help you understand how very different your income taxes will be.<\/p>\n Leaving your 2021 income tax planning until 2022 is risky. Let us help you start that process now.<\/p>\n Do you have a system for tracking income and expenses? It can help you minimize your 2021 tax obligation through smart planning.<\/p>\n Are you an individual or business owner who’s interested in lowering your tax burden? Call us at\u00a0978-692-3291<\/strong>\u00a0and ask to speak to a tax accountant now or\u00a0request a consultation<\/a>\u00a0online and we’ll contact you.<\/p>\n<\/div>\nSOCIAL MEDIA POSTS<\/h3>\n
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