While 2019 may be a few months off, it is rapidly approaching, and it’s never too early to begin planning for the next tax year. The IRS tax code is constantly evolving, as is your own financial situation, so making these plans early will help you avoid unpleasant surprises later on. Among the various tactics one can use to prepare for the next tax year are the following.
Review Your 2018 Return
First, you’ll want to review your tax return for this year. This will give you some insight into where you might have been off on the previous year’s tax planning and how you might improve this year. If you ended up owing taxes, try to see why and make plans now to minimize those issues.
Organize Documents
Make sure your financial documents are all organized. The more accessible they are, the easier handling your taxes in the following year will be. It will also streamline the process of consulting with your accountant or tax attorney when it comes to making a tax plan. Statements from personal and business accounts, revenue documents, and other forms will be necessary.
Review Withholding and Estimated Payments
If you have income tax withheld from your paycheck, you’ll want to double-check that it’s enough. There have been some changes made to the tax tables this year, and those will impact whether or not you’ll end up owing when April comes around.
If you make estimated payments throughout the year, double-checking those against your income for the year so far will let you know whether you need to increase or decrease those payments. As you look at trends in your earnings, you’ll be able to better predict the amount you’ll have to pay in the coming year.
Mind Donations
Tax laws regarding charitable donations have seen some changes as well, and that means you may not necessarily get the tax breaks you’ve been aiming for when it comes time to file. Check your donations from this year against the amounts needed for them to be truly beneficial, minding that standard deductions have been increased in the last year as well.
Review Accounts
If you have a complex tax situation, carefully review each of your accounts and determine how those will be handled in the upcoming year. The way these accounts are funded and managed can have a significant impact on your tax burden this year and the year following, and the constant changes in tax code will certainly have their own bearing on the results. 401(k)s and IRAs, investment accounts, and so forth should all be carefully assessed for tax efficiency.
Consult a Tax Attorney
When making these plans, it’s paramount that you consult with a professional, especially in cases where you have a complicated tax situation. An expert such as a tax attorney will be up to date on current laws and upcoming changes to federal and state tax laws, and they can advise you on the best course to take when planning for the upcoming year. Hart David Carson LLP has experienced attorneys who can help you through the tax planning process, so contact us today to get started.