Keep these Tax Planning Tips In Mind
Like clockwork, we know our beautiful tax deadline is upon us, yet it always seems to sneak up on us. If you’re one of those individuals who bravely takes on the task themselves or hires a professional, like Tobin & Collins, it can still be a stressful experience. If it’s late March, we’re here to help you with some last-minute tax planning tips to help get you through another tax season!
Maximize your tax-advantaged accounts for the year
You may have numerous accounts that have built-in tax advantages, such as health spending accounts (HSAs) or individual retirement accounts (IRAs). Each of these accounts tends to have a maximum amount of funds that you can place in them each year and reap the benefits of not paying taxes on those funds. To optimize these benefits, you may want to get as close to that maximum as possible. As Tax Day approaches, it’s important to recognize that you can continue making contributions to these accounts that will count towards the previous year’s tax situation, up until April 15. So, as you look to file your taxes, you may want to look around or check with a trusted tax professional to see how you can keep making these beneficial contributions.
Choose your optimal accounting method
If you are self-employed or a small business owner, you can do your accounting either based on accrual or cash. On a cash basis means you recognize revenue or expenses the day that cash changes hand, whereas accrual recognizes revenue on the dates it is earned. Depending on which accounting method you use will affect your income accounting for the year, as moving to a cash basis from an accrual basis will reduce your taxable income for the year. You are permitted to change from one accounting method to the next, year to year, so you may find some savings based on this tax planning switch.
Consider changes in tax law
The tax law is constantly changing, so assuming the same deductions and rules you used last year will apply to this year’s isn’t always wise and could accidentally end up costing more than it otherwise would have. It’s important to be educated on what might have changed, such as adjustments to the limit of the estate tax exemption, what business deductions are eligible, and more. It can be immensely hard to keep up with these types of changes, so the best bet might be to ensure you work with a qualified and trusted tax expert when preparing your return.
If you feel flustered trying to get your taxes done in time, it may be time to pull in the professionals. The experts at Tobin & Collins are ready and able to discuss your tax return with you. Contact Tobin & Collins to help get started today.