Tax planning involves analyzing one’s tax situation to estimate how much taxes to pay after accounting for income taxes, tax credits, and other deductions. By delaying doing so, the taxpayer risks committing mistakes that can land him in trouble with the IRS for wrong information or late filing. Tax planning can also reduce tax liabilities and maximize eligibility to contribute to retirement plans.
IRS tax lawyers have provided these tips in conducting tax planning:
Do it early
The general deadline for tax return filing and tax payment is on the 15th of April. Many people would rather prepare for it as the deadline approaches. But by cramming, there is a higher chance of miscalculation, overlooking crucial information, and inability to find missing documents.
While tax season is usually the start of the year until the aforementioned date, tax planning can be done year-round. All the tax documents of transactions and activities that are needed to be reported should be kept organized to ensure efficiency in preparing for the tax filing.
Adjust withholding for major life changes
Do not forget that big changes in life and status, including marriage, switching jobs, having a baby, and others should be reported to make sure that there is no lack or excess in the paid withholding taxes.
Tax Tiger has years of experience in assisting clients on tax planning and tax resolution, helping them save hard-earned money, as well as time. Learn more about the company by visiting its official website.