The Ledger: Tax Planning Matters More Than Ever
Doug Reiling, CPA
Executive Director
Two tax seasons ago, we streamlined our extension process.
In the past, estimating extension payments often required significant additional tax preparation work during the busiest part of the year. While that produced very accurate extension vouchers, it also consumed valuable time that could have been spent completing returns.
Since clients consistently told us they’d rather receive completed returns than perfectly precise extension payments, we changed our priorities.
Today, extension payments are generally based on the assumption that income and withholding are similar to the prior year and that any estimated tax payments we recommended have been paid as planned. The results have been excellent, with more returns filed on time and fewer extensions overall.
There is one catch.
This streamlined extension process works best when your tax situation is similar from year to year. If you’ve changed jobs, bought or sold a business, had major investment activity, experienced a significant change in income, or made estimated tax payments that differed from our recommendations, your extension payment may not accurately reflect your tax liability.
That’s where year-end planning becomes critical.
During year-end meetings, we help clients project their tax liability based on current-year expectations and identify opportunities to improve the outcome. For business owners, those opportunities may include timing expenses, equipment purchases, bonuses, benefits, and more. For investors, it may involve coordinating with financial advisors on loss harvesting, distributions, conversions, and other strategies.
Even when clients choose not to pursue planning opportunities, there is tremendous value in knowing the outcome ahead of time. Learning in October that you’ll owe additional tax gives you months to prepare. Learning the same thing in April gives you days.
If your financial situation changed this year, now is the time to schedule a planning meeting. Planning appointments fill quickly during this time of year, and availability can become limited. Contact our office today to reserve your spot and give yourself the greatest number of options before year-end.