If your tax return was a target, the bullseye would be $0. You don’t want a giant tax bill—that means you didn’t have enough money taken out of your paycheck for taxes. And that huge tax refund? That’s not free money—it’s your money, which you’ve been loaning too much of to the government throughout the year (with no interest, by the way).
Great tax professionals won’t just help you file your taxes, collect their fee, and then disappear. They’ll be there after you file to answer your questions about your tax situation. Not only that, they can show you how to adjust your tax withholdings and get closer to that sweet spot where you’re paying almost exactly what you owe to Uncle Sam—no more and no less.
Your tax pro can suggest making some tweaks in different areas of your finances. They can walk you through how your investments are taxed, the tax implications of buying or selling a home, or when it’s a good time to incorporate your side hustle into a small business.
Here are some things you might want to pay now so you can benefit later.
Like Ferris Bueller once said, “Life comes at you fast.” And if you don’t stop and look around once in a while, you could miss out on some big tax breaks or adjustments you need to make during any given tax year.
Did you get married, have a baby, or buy a house in the past year? Those are just a few major life changes that can change your tax situation—and your tax pro can help you understand what those changes mean for you.
And beyond taxes, your tax pro could also suggest taking steps to help protect your assets or help you make more progress on your financial goals for the rest of the year. Maybe you need to get term life insurance once you get hitched or set up a trust to protect your estate. Your tax pro can provide some really valuable insight into those areas!
Dozens of states offer tax benefits to people who contribute to 529 college savings plans, and many have a Dec. 31 deadline for those contributions.
Couples filing jointly can deduct the interest paid on qualified residence loans of up to $1 million, depending on when they were secured. (If you file separately, you can deduct interest on as much as $500,000 of the indebtedness.)
Quarterly estimated taxes
Fourth-quarter estimated tax payments are due Jan. 15. But some experts say you might want to avoid procrastinating. If you make your state payment this month, you’re technically meeting the deadline and getting it in before the end of the year. That means you can deduct the payment on your 2020 federal income tax return.
“By making a ‘prepayment’ of your state estimated tax payment for the fourth quarter two weeks earlier, you have accelerated the ability to deduct the payment by a year,” Savage says.
Fresno Financial Consultant Takeaways
Soutas Financial your Fresno financial planner would like to remind you of these great pointers: Your tax pro can suggest making some tweaks in different areas of your finances. They can walk you through how your investments are taxed, the tax implications of buying or selling a home, or when it’s a good time to incorporate your side hustle into a small business. And beyond taxes, your tax pro could also suggest taking steps to help protect your assets or help you make more progress on your financial goals for the rest of the year.