A Checklist for Tax Planning

Do you ever take the time to run a quick midyear tax checkup? There are a lot of good reasons for doing so. Life moves quickly, and events both anticipated and unforeseen have an impact that can be far-reaching. In some cases, they may mean that we get an additional tax break while in others it may add to our burden.

Whichever it is, there is no reason to wait until your taxes are due to learn about the consequences, especially because if you take the appropriate steps as soon as they are applicable, you may be able to avoid penalties, owing more money than you anticipated, or even be able to get some money back. Here are just a few of the types of questions that a tax review gets answered. If you answer yes to any of them, then it may be time to make an appointment with a tax professional.

  • Has your income increased or decreased significantly?
  • Have you sold a business? Purchased one? Start one?
  • Have you gotten married or divorced? Has your spouse died?
  • Have you purchased or sold a home?
  • Have you refinanced or taken out a second mortgage on your home?
  • Have you purchased or sold a rental property?
  • Have you changed jobs?
  • Has your spouse started working?
  • Have you retired?
  • Have you had or adopted a child?
  • Have you inherited any money or assets?
  • Have you sold stocks or bonds and either realized a significant gain or loss?
  • Are you set up with a tax-advantaged retirement savings plan?
  • If you are 70.5 or older, have you withdrawn the required amount from your IRA?
  • Are you aware of all of the new tax laws?
  • Are your investments providing you with significant income that may be eligible for the 3.8% net investment income surtax?
  • Have you been paying the appropriate amount of estimated quarterly taxes?
  • Have you installed a solar energy system to your home or second home, or have you purchased other energy efficient improvements or appliances for your home?
  • Did you buy any new equipment for your business?
  • If you are 70.5 or older, have you taken advantage of the option to make IRA-to-charity transfers?
  • Have you been documenting all of your charitable contributions, whether cash or non-cash?
  • Do you have plans to replace an old business vehicle with a new one? If so, you may want to learn more about the tax impact of selling the old one vs trading it in.
  • Have you paid any college tuition for any dependents, for your spouse or for yourself?
  • Have you purchased health insurance through the government marketplace? Did you qualify for the subsidy? If so, then you need to be aware of how changes in income and family size can impact you.
  • Have you made any unplanned withdrawals from your pension plan or IRA?

Sometimes when we’re in the midst of things we forget that changes that effect our lives – whether professionally or personally – can also have a dramatic effect on our tax liabilities. If the answer to any of these questions has become yes since the last time you filed your taxes, or if you are anticipating that the answer to any of them will be yes before tax time rolls around, then it would be a very good idea to call us to make an appointment to discuss how your tax situation may change as a result and to plan accordingly.

If you have questions about any of this, or the tax impact of any other advanced planning, call our office today at (562) 445-3888.