Tax Planning for Consistency

Tax Planning for Consistency is a blog that goes right along with our previous tax planning article to eliminate surprises and save money. Now that the dust has settled with tax season, let’s take a look back at what happened. Were you surprised by how little you got back in your refund this year? Or maybe you owed more than you’d expected? Safe to say, surprises from the IRS generally don’t mean good news. When you do tax planning for consistency every year, you’ll find you’re less and less surprised each April. But you have to do your homework… or know someone who can help you.

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Were you surprised by how little you got back in your refund this year?
Better Planning Eliminates Surprises

Instead of waiting until somewhere around mid-April to get a handle on your tax responsibilities, review them quarterly. If you own a small business, that means making payments or submitting loss statements on quarterly tax estimates.

Additionally, review your purchasing needs for new equipment or evaluate how other expenses might impact your tax responsibilities. Consider any new employees or contracts you’ve taken on. This is also a good time to review profits and losses to help you better plan for the next quarter.

Not only that, but you can also get a better idea of how well you’ve accounted for year-end taxes. Also, by sending accurate quarter tax estimate payments you eliminate those pesky late penalties the IRS loves to tack on.

When you take time to plan out your strategy, you can attack your taxes each year in more manageable chunks. Then you get a more consistent (and reliable) idea of your tax liability.

Changes in Tax Law

The IRS likes to keep everyone on their toes by changing the rules every year. Everything from standard deduction and tax brackets shifts pretty much annually. But pandemic-related tax provisions made things even more complicated, especially when they went away.

Occasionally, changes in tax laws work to your advantage, but sometimes only temporarily. For example, the child and dependent care credit boosted the maximum credit percentage in 2021 (up to 50%) dropped to 35%. And while it was fully refundable in 2021, that’s no longer the case in 2022.

But more likely you saw things like unemployment income taxed again. In 2020, the American Rescue Plan allowed impacted individuals to waive up to $10,200 of paid unemployment. In 2021? If you didn’t already withhold taxes from your benefits, unemployment compensation taxation may have come as a surprise.

Finally, unsure of how to get started? Relax! Our experienced tax professionals have helped hundreds of taxpayers just like you. We’ll help you understand how the latest changes in the tax code might affect you. And we’ll help you plan your year for better consistency. Complete our online form or call us today at 724-216-5180 to learn more.

Cut those taxes by investing in a consistent tax planning strategy.

Five Benefits of Tax Planning

Five Benefits of Tax Planning covers five reasons why a proper tax plan saves you time, money, and stress. Now that April’s rush to file taxes on time has settled down, let’s talk 2022 taxes returns! I can hear you groaning from my office. You probably don’t want me to tell you this, but some people need reminding. I’ll spare you the lecture and give you five benefits of tax planning.

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Tax planning saves you time, money, and stress.
Quarterly Reviews

Next year’s tax return probably doesn’t rank very high on your list of priorities right now, does it? But when you take the time to make incremental adjustments during the year, your April will feel much less painful.

Whether you file personal or business returns or both, quarterly reviews help you get more organized for April. Businesses need to file quarterly estimates and quarterly reviews help to decrease the pain of those sessions, too.

The Payoff of Planning

1. Less Stress

I don’t know anyone, including adrenaline junkies, who enjoys scrambling around looking for lost receipts at the last minute. When you plan out a bit of work each quarter, that work creates much less stress ahead of filing.

2. Fewer Errors

Less stress and more time to check your work will also result in fewer errors. Tax return errors, especially when you file yourself, can get incredibly expensive if you mess something up. You also have time to run questions by a tax planning professional to further reduce your chance of error.

3. Avoid Penalties

When you wait to file taxes until the last minute, you may miss something that you should’ve submitted. By the time the IRS is ​kind enough to tell you, they’ve usually already tacked on penalties for filing late. Penalties continue to accrue interest until you pay off the principal, too. Ultimately, this makes the bill much more expensive than the original amount.

4. Minimize Tax Liability

With proper time to plan, you can also make more strategic decisions on how to minimize how much you owe. Maybe you decide to make a larger purchase this year or increase your retirement savings contributions. If you wait until the last minute, you won’t have time to adjust your course.

5. Research New Tax Laws

As you adjust your course, you can also see how new tax laws impact your current plan. The IRS loves to come up with new laws every year. If you don’t keep up with them, you can leave money on the table or end up owing more.

Need help getting it together for next tax season? Our experienced tax law professionals can help you minimize any taxes you owe and ensure you comply with all applicable laws. We can do a much better job together if we talk regularly throughout the year. And you’ll learn way more than just these five benefits of tax planning. Complete our online form or call us today at 724-216-5180 to learn more.

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kind enough to tell you, they’ve usually already tacked on penalties for filing late. Penalties continue to accrue interest until you pay off the principal, too. Ultimately, this makes the bill much more expensive than the original amount. 4. Minimize Tax Liability With proper time to plan, you can also make more strategic decisions on how to minimize how much you owe. Maybe you decide to make a larger purchase this year or increase your retirement savings contributions. If you wait until the last minute, you won’t have time to adjust your course. 5. Research New Tax Laws As you adjust your course, you can also see how new tax laws impact your current plan. The IRS loves to come up with new laws every year . If you don’t keep up with them, you can leave money on the table or end up owing more.

Expect Massive Delays in Processing Your Tax Return This Year

Every year, the IRS seems to get just a little farther behind in getting tax refunds back to people. Throw in the processing of Economic Impact Payments and you’ve got yourself a royal mess. In January, the Treasury Department warned taxpayers to expect massive delays in processing of your tax returns this year. That’s just great, right? But…relax! Below we offer some tips on how to get your cash back as soon as possible.

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You can probably expect massive delays in processing your tax return this year.
File ASAP

The early bird gets the refund faster. If you put your return in the queue earlier, there will be fewer returns ahead of yours to process. Keep your files organized and ready to go. If you haven’t gotten organized yet, make it a priority. The IRS is still saying they’ll strive to process refunds within 21 days of receipt. And that theoretically can happen for you if you file your return early and don’t raise any red flags.

File Electronically

To expedite your tax refund process, move away from paper submission. Filing paper returns requires time-intensive, manual processing. To ensure a smoother process, file electronically with direct deposit to avoid delays in process, receiving refunds, or notices from the IRS. More than 90% of 160 million people who file taxes submit their returns electronically. You can also check the status of your refund on the IRS’s Where’s My Refund? page.

Have Documentation for Everything

Whether you file a simple W-2 each year or a complicated small business owner return, have documentation for everything. Have your documentation saved electronically for easy access should you be asked to provide proof of anything in your submission. Any questionable numbers will increase your odds of an audit. Make sure the numbers match on the forms before you submit your return. Anything you’re unsure about leads into our next recommendation…

Don’t Guess, Ask an Expert

Even if you think you have a simple preparation process, rules change all the time. If you can’t easily locate an answer to your question, don’t just guess at what to do. Take the time to ask an expert. Even the big online processing companies have an option to connect with a CPA. The small fee for a consultation could end up saving you thousands in the long run. If you have an especially complex situation, your best bet is to enlist the help of an experienced tax attorney.

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Exercise Patience

Fun fact: the IRS has been running with the same number of staff since the 1970s, despite the American population increasing by 60% since then. Nearly 75% of American taxpayers expect a refund each year, so you’re not alone. Many people count on their tax return to fund vacations or use it pay down debt. However, depending on those refund checks coming in by a certain time can backfire on you. As of December 31, 2021, six million people were still waiting for the IRS to process their 2020 returns. As frustrating as this delay is, there’s nothing you can do. ​

In conclusion, we hope this blog, Expect Massive Delays in Processing Your Tax Return This Year helps with your tax preparation plans. Need help getting your taxes ready or have a question? Our experienced tax professionals can help you minimize any taxes you owe and ensure you comply with all applicable laws. Complete our online form or call us today at 724-216-5180 to learn more.