With all the tax changes last year many had a big surprise when they filed their taxes this year. One sure way to prevent more surprises next year is to update your tax plan now. Having an effective tax plan will help you make smart decisions now so that in the future you will have the outcome you want. Below are 6 things to consider as you plan ahead.
- Will you be getting married or divorced? Getting married will mean a new tax status. It will also mean new income limits, deduction amounts, and even a potential marriage penalty. The same is true when it comes to divorce only a bit more complex. You have to deal with assets, alimony, child support, and claiming dependents. All of which should be included in your tax planning.
- New family additions. A new baby adds new expenses to you budget. But it also comes with new tax breaks. If you’re considering adoption there are also tax credits available for assistance with adoption expenses.
- A raise or new job. We all love making lots of money but unless you plan ahead you could get a surprise tax hit at the end of the year. That extra money from your raise could put you in a higher tax rate and/or tax bracket. For those changing jobs, your new benefit package may result in higher taxes too.
- Buying or selling your home. There may be tax implications as a result of your purchase or the sale of your home. There may be even more tax issues for those buying or selling investment property. You can avoid big surprises and make better financial decisions if you know how your taxes will be affected ahead of time.
- College. Whether you’re paying or saving for higher education, there are many tax break options. The options include the American Opportunity Tax Credit, the Coverdell Education Savings Account, 529 plans, and student loan interest deductibility.
- Retirement planning. Although everyone’s situation is different, we all need a retirement plan in place. There are multiple factors to keep in mind that include your current income, your available cash, your employment status, future earnings and tax rates, your retirement age and Social Security. Analyzing all of these factors will help you create a retirement strategy.
At Summit CPA we offer multiple resources to assist you with all of your tax and financial planning needs. Contact our office at 866-497-9761 to schedule an appointment with our advisors.