While tax season is typically from January to April of every year, summer is the perfect time to take advantage of tax planning. Taking a quick look at your monthly budget, spending, and income can give you insight in regards to what your taxes will look like the following year. The midyear checkup services several important functions. Better yet, you can always learn how to stay on top of your taxes with a local tax planning professional.
The Benefits of a Mid-Year Tax Check-In
Making the time to check on your taxes mid-year is beneficial in many ways:
- Spot potential areas for issues and adjust accordingly
- Time to react to yearly spending
- Time to reflect on long-term strategy and goals for your business
Doing a mid-year tax check-in doesn’t have to be all about preparing for tax burdens. Make necessary actions while you can!
Update Income and Expense Records
It is recommended to update income and expense records whenever changes arise. Although, we understand you may not have time to be doing this regularly. This is why you should take advantage of mid-year tax planning. You need clear income records for calculating your total income for liability. Additionally, you will need good expense records for claiming deductions. Keep these in mind always.
Check In On Your Bookkeeping
In order for your tax planning to go as smoothly as possible, you should work with the best bookkeeping possible. Accurate and comprehensive record-keeping is important, so at the halfway mark, check in on your bookkeeping. Oftentimes, working with small bookkeeping services tends to be the best. It is easier for small tax planning professionals to maintain a complete record of your files.
Review Quarterly Estimated Tax Payments
In the case that you do not make enough income taxes in withholding, it is crucial that you make quarterly tax payments to be able to cover the rest. This is especially important for small business owners and anyone who is self-employed. Late or insufficient payments can result in fines. You can schedule these payments ahead of time with online tools equipped with automatic payment options.
Consider Life Changes
Most young adults only have to worry about wage income and educational costs. However, the older you get, your business and family investments make tax planning much more complicated. If your financial situation has changed drastically, it is important to work with a tax prep professional so they can answer all the questions you have.
Check Your Withholdings
New tax laws are bringing about major changes to tax withholdings. Many people find themselves surprised by the following changes:
- Owing more money than the previous year
- Refund is much less or more than expected
To keep yourself from being in the dark about unexpected changes, you can conduct a paycheck checkup now with tax prep services.
Maximize Deductions and Credits
Did your family grow? Did you just get married? Did you relocate at any time in the past year? Did you get hired for a new job? Did you buy a house? These are just some of the many questions that will come up when you file your taxes. These are important to keep in mind because they can change your eligibility. Your filing status changes and you could be looking at additional tax exemptions.
Familiarize Yourself with Changes in Tax Law
There are some ever-changing aspects of tax law you should always be in the know about such as:
- Inflation
- Health care
- Medical expenses
Tax brackets are adjusted to account for inflation, which can impact how much income taxes you will be paying. When it comes to healthcare, taxpayers who do not have proof of insurance will receive a tax penalty. This is because the Affordable Care Act is still in effect. As for medical expenses, if you itemize your taxes, you can deduct expenses that cost more than 10% of your adjusted gross income.
Move Some Money to Your Retirement Accounts or 401(k)
In the case that you have more money than you anticipated for this time of year, this is a great opportunity to add to your 401(k). If you are already contributing to your retirement account, you can increase the amount you are saving in order to reap the benefits of the maximum amount. You could qualify for a tax break on your earnings because the money comes out of your paycheck on a pretax basis.
Consult With A Tax Professional
Lastly and most importantly, make time to sit down with a tax prep professional. Don’t stress if any questions come to mind. Instead, make an appointment so you can work through concerns and make your situation understood. Getting help from a tax prep professional is also helpful when it comes to understanding how new laws can affect your taxes.
Stay Prepared for Tax Seasons with Our Tax Prep Professionals
You will never regret working out tax issues ahead of time! Wherever you are in the process, we can pick up where you left off and assist! Get in touch with our El Paso tax prep professionals by calling (915) 593-3330.