Why You Should Use Tax Projections and Tax Planning Services
This year has been an odd one for taxes. With the official tax season just barely ending a few weeks ago, we already have extension deadlines looming on the horizon. And, with the year already half over, it’s time to start thinking about what your 2020 tax return will look like. Rather than simply reacting to what you owe, now’s a great time to actually start planning your taxes, making early moves to improve your outcome and reduce your tax liability. We offer professional tax planning services and tax projections for individuals and businesses alike. Here are a few reasons you should start utilizing these services.
Plan for Your Payments
Have you ever had the experience of filing your return and being shocked by the amount you owed? This was a fairly common event after the implementation of the Tax Cuts and Jobs Act, and many people found themselves scrambling to put together the funds for the tax payments. Of course, this can happen in any year, whether new tax laws have been implemented or not, and the best way to avoid this situation is to get professional tax projections.
We can look over your finances and provide an estimate of what you’ll owe when it’s time to file. Even if there are several months left in the year, we can look at what you’ve earned so far, talk to you about anticipated income and expenses, and give you an estimate of what you’ll owe. This can help you have a better idea of what you’ll have to pay so you can begin putting the funds together now, rather than scrambling to pay at the last minute.
Make Moves to Reduce Liability
If you’re simply filing your return every year and hoping for the best, you’re probably paying more than you should in taxes. Proper tax planning helps you to get a bigger picture of what you’re paying and how you can reduce your tax liability—but you have to plan ahead if you want to make it work. Tax planning gives you the chance to look over your current earnings and assess your options for reducing your taxable income.
This might include making charitable contributions, contributing more to retirement accounts, or making important purchases for your business before the end of the year. You can take advantage of smart tax moves like “bunching” charitable contributions and expenses to minimize your tax liability year after year. We can help you to determine the best way to reduce your tax liability when we sit down with you for a tax planning meeting.
Invest More in Your Business
Tax planning also provides you with opportunities to invest into your business while simultaneously reducing your company’s tax liability. As mentioned above, making tax-deductible purchases for your business is one way that you can reduce your taxable income. But additionally, making timely purchases for your company essentially gives you that equipment or other investment at a reduced rate. Here’s an example:
Your business has earned a bit more this year than in previous years, and you’ve been pushed up into a higher tax bracket; let’s say you’ll now be taxed at 35%. You’ve also been eyeing a new piece of equipment that will cost you about $1,000. If you did not purchase the equipment, you’d pay $350 on that money in taxes. However, if you were to purchase the piece of equipment, the expense would be deducted from your taxable income. This means that you are essentially getting the equipment for 35% off, since you won’t have to pay the $350 in taxes for that expense.
And, of course, if you’re just barely over the threshold for that 35% income tax bracket, we can help you to find smart purchases and investments that may bring you back down into a lower tax bracket. While there’s no guarantee that we can reduce your taxes or help you get down into another tax bracket, we can help you to decide which purchases might be a smart investment based on your business income and taxes.
Vital for Individuals and Businesses
Whether you’re filing a business tax return or only filing an individual tax return, proper tax planning can benefit you enormously. Taxes shouldn’t simply be something you react to; they should be something that you plan ahead for, make preparations for, and work to improve as you make smart financial decisions. And we can help with that. Contact us to schedule your tax planning meeting today, and we’ll help you get on track for the coming tax season.
Camputaro and Associates
Certified Public Accounting Firm
136 N. Orchard Street, Suite 8
Ormond Beach, FL 32174