Know Your Number Before December 31
Every January, someone asks us whether there’s anything they can still do about last years tax. Occasionally there is. Usually there isn’t — almost every decision that shapes a tax return has a December 31 deadline attached to it.
That’s why we offer tax planning. It’s the work that happens before the year closes, while the outcome can still change, and it carries straight into the year ahead.
It starts with a projection
The first thing we do is estimate what you’re on track to owe. We take your income so far, what’s still expected through the end of the year, what you’ve withheld or paid in, and build a projection of your return before it exists.
For a lot of clients, that number alone is worth the meeting. If a strong year in the business, a raise, or a property sale is going to raise your tax bill, it’s far better to see it in November than to find out in April with a single large payment due.
Then we make recommendations
Once we can see where the year is headed, we look at what can still move it. Every situation is different, but the conversation usually covers a handful of things:
Retirement contributions. Whether there’s room to put more away before year-end, and for business owners, whether a different plan would let you save more.
Timing. When to pay certain expenses, send certain invoices, or place equipment in service, so income and deductions land in the year where they do the most good.
Charitable giving. Whether grouping several years of gifts into one, or giving directly from an IRA, would get more out of what you already plan to give.
Business structure. Whether the way your business is organized still fits what it earns, and whether an election or a change in owner salary is worth making.
We run the numbers on each one, so you’re not deciding on a rule of thumb. Sometimes the recommendation is to change a few things. Sometimes it’s that you’re in good shape and should leave it alone. Either way, you know.
And we look ahead to next year
Planning doesn’t stop at December 31. Part of what we do is set you up for the year coming — adjusting withholding or estimated payments to match what you’ll actually owe, flagging changes on the horizon, and noting what to keep an eye on as the year goes.
For business owners, that often means checking in again mid-year. A projection in the summer gives us time to make adjustments that a fall meeting can’t.
What you’ll need to bring
Less than you’d think. If we already prepare your return or keep the books, we have most of the picture. A recent pay stub, a current profit-and-loss statement if you own a business, and a sense of anything unusual this year — a sale, a new job, a large purchase — is usually enough to get started.
If you’re new to us, last year’s return is a good place to begin. We can build from there.
The best time is now
The closer we get to the end of the year, the fewer options there are. A conversation in October or November leaves room to act; one in late December leaves very little.
Reach out through our contact page — we’d be glad to sit down with you, look at where your year is headed, and talk through what makes sense before it closes.
