There are few things as frustrating as expecting a tax refund and finding out that you owe the IRS A LOT of money. As a CPA, I get to make a lot of phone calls to clients on how much tax they owe. Almost every time (once my client recovers from the shocking news) they ask two questions; how did this happen and are there any other deductions we can take?
The specific answers to both of those questions are as unique as each client, but the reality is that most taxpayers (with a little foresight and tax planning) can reduce or eliminate the surprise of a tax bill.
I suggest that while taxes are fresh in your mind, you take a few hours to prepare for the coming year.
For your individual return make sure that you examine the following:
- Am I contributing to a 401k? Are you maximizing your contributions?
- Should I contribute to a Roth or traditional retirement plan?
- Do I qualify to Contribute to a Health Savings Account (HSA)? Am I maximizing contributions to my HSA?
- What was my tax from last year?
- Is my income significantly different from last year?
- Are my federal and state withholdings from my paycheck covering the tax I owe?
- Can I deduct your charitable contributions?
- How does paying charity every other year or batching my contributions change my tax?
- Can I prepay state income or property taxes?
- Do I have investments with losses that I can use to offset other gains?
- Can I bunch medical procedures for a later year into the current year?
Business owners should also consider:
- How do I defer recognizing income?
- Can I accelerate paying expenses?
- Are my children working for the company? Are they being paid?
- Are there assets I can buy currently that I will need in the near future?
- Should I change the tax structure of my business to be more tax efficient?
As always, a competent professional can help you optimize your tax situation and help you with achieving your financial goals. The Utah Association of Certified Public Accountants (UACPA), has a listing of qualified professionals that can be of service.
As a full-service accounting firm, Cook Martin Poulson has a broad range of tax and accounting professionals. In addition to income taxes and financial statement audits, our professionals can assist in specialized services such as Income Tax Services, Financial Statement Services, Business Valuations, business purchases and sales and many more. Read more about Utah Taxing the PPP Loan Forgiveness