Although September is not even over, it is a good time to start thinking about year end tax planning. I know it does not sound like fun, but a little advance planning will almost always help you reduce the taxes you owe.
This purpose of this blog post is to make you aware that offer year-end tax planning report to all my clients and potential clients. The report will show you how much Federal and State of Michigan income tax you will owe in 2012 based on a projection of your income and deductions for the tax year 2012. It will also show how much of a refund you can expect or how much you are projected to owe on April 15th, 2013.
If you are projected to get a refund, you can lower your tax withholdings to get your refund now. Or if you are projected to owe taxes, you can increase your tax payments to avoid or reduce late payment penalties and interest.
But that is not the main advantage of doing a tax projection. A projection will also give you an opportunity to play the “what-if” game and see how employing various tax planning techniques will impact your income taxes this year and into the future.
People that are likely to benefit from this type of analysis include:
- Individuals whose income fluctuates from year to year significantly because they own a business.
- Individuals who have large amounts of investment income from the sale of capital assets (stocks, bonds, etc.).
- Individuals who receive income from which there is no income tax withheld (e.g., interest, dividends, and Social Security).
- Individuals who can manipulate their deductions from year to year by paying bills before December 31 or waiting until 2013. For example, buying a new computer for your business in 2012 instead of 2013 or paying your 2012 Winter property tax bill before it is due in 2013.
- Individuals who plan on making a contribution to their retirement fund in 2012 (e.g., IRA), but want to know just how much money they will save by doing so.
Your customized tax plan will include:
- A professionally prepared report based on your specific situation.
- A tax analysis for 2012 under as many as 10 different “what-if” scenarios.
- A tax analysis for as many as 10 years into the future.
The cost to produce this analysis will depend on the complexity of your situation. However, most plans will likely be in the $100 to $200 range which could easily be offset by potential tax savings and/or avoiding underpayment penalties and interest. If you are interested in receiving your analysis, please contact me to set up a time to meet to discuss your specific situation.