Tax Planning is a Year-Round Process
Tax planning is a year-round process and should be used as a proactive, strategic tool in your business and personal arsenal. With just 61 days remaining in the current tax season, (based on the current deadline of April 18, 2022), if you did not have a tax plan in place for yourself or your business in 2021, now is a good time to get organized and plan ahead to save time and money in 2022.
Individual Tax Planning
No one earns or spends money the same way nor do they invest or save the same way. The same is true for short-term and long-term goals. The tax plan that works to achieve the goals for one person or business, will not reap the same benefits for another.
WM WISDOM:
Tax planning is a year-round process and should be used as a proactive, strategic tool in your business and personal arsenal.
Understand Your Financial Situation
Review your income and projected income, investments, deductions, and speak to your CPA. Make certain to discuss your goals and impending changes in work, income or family to understand what tax deductions or tax credits you may qualify for in 2022.
Individual Items to Consider:
- Capital gain or loss strategies
- Itemized Deductions
- Other Income (including alimony, interest, dividends, etc.)
- Buying or selling a personal residence
- Retirement Plan Distributions and Contributions
- Health Savings Plans
- Flexible Spending Accounts
- 529 Education Savings Accounts
- Are your withholdings correct? Need to complete a new W-4?
- Available Tax Credits
For business owners:
- Are you thinking about selling your business?
- Buying another business or expanding?
- Methods of Accounting
- Timing of Receipts and Disbursements
- Payroll Bonuses
- Funding Retirement Plans
Life Events
Certain life events will create a need to modify your tax withholdings. Life events include (but are not limited to) the birth or adoption of a child, divorce, or marriage. You will want to re-visit your tax plan to make certain you understand your tax obligations and make changes accordingly.
Stay Organized
Establish one location to place tax-related records during the year. This could be a tangible location for paper documents, or you may keep digital files on a hard drive or in the cloud. Whatever method is easiest for you, records need to be kept in a safe location. Keep in mind that tax returns and supporting documents need to be kept for a minimum of three years in case an audit.
Questions?
Should you have questions about tax planning, or any other topics related to your personal or business situation, please contact us at any time.
DISCLAIMER: The WM Update, WM Wednesday Wisdom, WM Daily Update COVID-19, COVID-19 Business Resources, COVID-19 Client News Alerts and other related communications are intended to provide general information, including information regarding legislative COVID-19 relief measures, as of the date of this communication and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this communication. Some of those modifications may be significant. As such, be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.
