If you were surprised by your taxes this year, then there’s no time to start preparing like the present! Honestly, even though your first inclination may be to put all IRS-related items to the side for another year, you’ll never get ahead of the curve with that approach. While we prefer to work with our clients individually to make personalized tax plans (in advance), some tips are universal. Here are some things we recommend:
- Develop a system that works for you.
If you found yourself spending a lot of your personal time this year finding receipts and tallying deductions, then that’s a sign you need to try something new. Now, we’re not saying you have to create your own method. In fact, there’s no real need for you to do that, when so many other developers have done the hard work for you! You really just have to pick one that you like and that you think you’ll actually use. As Certified ProAdvisors for QuickBooks, we can help you get it all set up now, rather than waiting until next year’s tax season. Additionally, we try to recommend other techniques and apps for organizing your finances throughout the year, based on your business.
- Review your contributions and withholdings.
If you switched jobs this past year, or increased your salary, you might have gotten an unpleasant surprise on this year’s taxes. Fortunately, that’s an easy correction to make. You can talk with your HR and/or payroll company and change your exemptions as a W-2 employee. If owed taxes unexpectedly, try to reduce your exemptions and have more withheld each paycheck. Conversely, a big refund this year could indicate that you’re having too much taken out. Why wait to get that portion of your income? The earlier in the year that you make the appropriate adjustments, the bigger difference you’ll see come tax time.
As a self-employed person, you have a larger tax burden, but also greater control over your withholdings. By creating income projections now based on the information we now have for 2017, you’ll have a better idea for budgeting, as well as your quarterly estimated payments. If you contribute to a retirement plan of some sort, you may also want to adjust your finances there. It’s a great way to save for the future and reduce your current tax burden, so if you don’t have a plan already, consider starting one this year!
- Consult with your accountant before making any major decisions.
While we could offer some blanket advice about “bunching” or charitable contributions, that’s not really our style. Now that the tax-time crunch has passed, it’s time for us to do what we really love—work closely with our clients! So, if you’ve been thinking about restructuring your business or selling off some assets, talk to us first. It can make a big impact on your 2018 taxes—positively or negatively. We want to help you control that outcome.
From a personal tax return standpoint, you may want to maximize certain deductions this year, especially if you have a family and/or upcoming medical expenses. But, that all depends on whether or not that’s even in your plans. Allow us the chance to sit down with you, talk about your life, and help you make your taxes work for you, rather than the other way around.