Tax Planning

The Best Professional Advice for Tax Planning Issues During Off-Season

Lee Reams II
The Best Professional Advice for Tax Planning Issues During Off-Season

Major life events happen year-round — regardless of how you personally attempt to control them. Giving birth to a child, starting a new job, or even selling your business are all major events to be celebrated; but they can also cause major headaches if you haven't planned ahead for the tax ramifications of it all.

If you don't plan ahead, it may be too late to resolve certain issues come tax time — something that is true for both companies and individuals.

Generally speaking, mitigating risk from certain tax planning issues during the off-season is less the product of any one major move and is more about a series of smaller, more meaningful ones. Little, positive steps here and there can add up to something powerful — an idea that many of our professionals wholeheartedly agree with.

Navigating Income Tax Planning in the Off-Season: Breaking Things Down

"Tax planning during the off-season actually begins during tax season," said Bradley Smith, EA of Bradley Smith, Inc. "For me, it means staying updated during the year about what is going on in the lives of my clients. I advise them to let me know when they change jobs, get married, get divorced, sell a business, have a child and a whole host of other things. I also remind them that stock sales, buying a substantial amount of equipment and selling a rental property are things that may ALL require a tax review — even if April is still a ways off."

Gene Austin of Tax Strategies Group agreed with that idea. "We advise clients to consider potential life changes — like starting a new business or purchasing a new home — and how this may increase their needs for cash," he said. "We advise them how the impact of making these changes in the current year versus the following year will impact their tax bill, along with how certain retirement investments, business deductions or even energy credits may be used to reduce their income taxes."

Overall, it was perhaps Joshua Standley, EA, ABA of DKK Accounting who explained it best on this particular topic when he said, "Tax planning needs to be done proactively, not reactively. If you don't consult with your financial professional before making major decisions, the impact on your tax return could be devastating. Once you've gone ahead with a transaction, we are unable to effectively manage the outcome, and you can't change the past."

Luckily, he indicated that the reverse is true, too. "If you're looking to minimize your taxes," he said, "consult with a professional BEFORE you make any major decisions. The outcome will be significantly better than when you don't."

When It Comes to Tax Planning, the Best Defense Is a Good Offense

Much of the other advice our experts gave involved taking advantage of certain opportunities during the year as opposed to during the run-up to tax season. Robert Hodge, AFSP of Robert Hodge Tax & Accounting Co. said that for the 2019 tax year, clients should "consider bunching their charitable donations on the odd year, giving an amount equaling double that of your annual giving."

He elaborated on that, saying that "if you are married and annually you give $14,000 to your charity, in 2019 you should double that donation to $28,000 on the odd year and then give zero in donations in 2020. This will result in a larger itemized deduction for 2019, and you will still be able to take the standard deduction of $24,000 in 2020."

Gabriela Snell, EA of Orlando Accounting Professionals had advice focused on a different type of client: those who are self-employed.

"During tax season I discuss with my self-employed clients the importance of paying themselves a salary," she said. "We also discuss making estimated payments. But in the off-season, I remind my clients to come for a review of their book every quarter or at least twice a year, so we can determine what a reasonable salary would be. That way, they can begin paying themselves and the corresponding payroll taxes."

Teszra Cody, EA of One On One Tax and Financial Group, LLC had similar thoughts: "I frequently tell my clients to pay their estimated taxes in a timely manner." She indicated that "individuals can avoid a lot of headaches by making these payments on time and for the correct amount."

All told, the running theme throughout all of this advice is clear: Just because tax season only comes once a year doesn't mean you should only THINK about it once a year. By remaining focused on taxes throughout a given year, you not only help avoid a lot of common tax planning issues that people run into — you help make things significantly easier on yourself once April rolls around again, too.

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Lee Reams II

Lee Reams II


I am a tax and business news junkie who has spent the last 20 years developing and executing "best in class" word-of-mouth marketing campaigns for tax and accounting professionals. With TaxBuzz and CountingWorks we have taken that same commitment to quality content directly to the consumer. Keeping you up-to-date with the latest tax law changes, business growth tips and planning strategies to help you reach your best financial outcome.

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