Remember when filing your taxes was as easy as entering the information from your W-2 form onto your tax return? Maybe you owed a little or maybe you got a small refund. But now you own a home, invest in mutual funds, buy and sell stocks, contribute to retirement accounts, and have no idea what that means for your current or future tax bills. As April 15th looms, you dread a large tax bill but hope for a large refund instead. It doesn’t have to be this way. With a little tax planning, you can have a good idea every year whether you will owe or whether you’ll save money.
At Moore & Paquette Tax Group, we can help you plan for the coming tax season and for the future. It’s not just about knowing how much money you’ll be making and how many items you can deduct, it’s about developing a strategy around your taxes.
Making Estimated Payments
If you owe money on your taxes year after year, it’s time to look at why. It could be a deduction you’re not taking or a credit you’re missing out on. It could be that your income fluctuates year to year, depending on your business or your investments. But if you’re consistently owing money, making estimated payments based on your past tax returns could make a difference, especially if you’ve also been paying penalties and interest on the amount that you owe the IRS. We can analyze past tax returns and help you establish a more consistent plan for paying estimated taxes.
Contributing to Retirement Accounts
One way to become more strategic about your taxes is to contribute to various retirement accounts. Each account has its own set of advantages and disadvantages, but we can help you look at your specific situation and decide which retirement account would work best for your situation. For example, contributing to a traditional IRA will get you a deduction, potentially lowering your taxable income now, but you will pay taxes on those contributions when you withdraw them. Contributing to a Roth IRA could save you money down the line—you won’t get a tax deduction now, but you won’t pay taxes when you withdraw the money if you wait until your 591/2 to withdraw it.
Capital Gains and Losses
Another way that tax planning can benefit you is through capital gains and losses. If you have a capital loss in any given tax year, you can use that loss to offset any capital gains you have, thereby lowering your taxable income. If your losses exceed your gains, you can carryover those additional losses to future years, offsetting any gains in future years.
Tax planning can save you money in the long run. If you want to get started, call us today.
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