Avoid Shock at Tax Time with Tax Planning

Many of us simply work all year and then approach tax season with much dread. We delay doing our taxes for as long as possible because we don’t want to face this unpleasant task. Even people who feel assured of a refund may not file right away. But perhaps the recent changes to the tax code will encourage people to take a new approach after this year: tax planning. Rather than being surprised at what happens, you can plan for your taxes. You can make decisions earlier in the year that will help soften the blow of having to gather receipts and materials and pay taxes the following year. Last year, U.S. News and World Report suggested taxpayers “make a date with their financial planners” to avoid surprises in their 2019 taxes because “Last year’s tax cut and Jobs Act of 2017 made significant changes to federal tax laws – rejiggering tax brackets, capping some tax deductions and eliminating a few others.” Even if you didn’t do this and made no changes to your withholding to adjust for the ways that the altered tax law may change your taxes, you can still avoid the shock some will feel if they wait until the last minute to file and are unaware of how the changes will affect them. Getting help with your taxes earlier in the year will also allow you to get a head start on mitigating the effects of a large tax bill if you find that you need to pay more than expected.  The big increase in the standard deduction may be simpler for some but may cause anxiety for others. The article observes, “For individuals who don’t have businesses or other income, the charitable and medical deductions are the only other ways to possibly push these taxpayers above the standard deduction.” If you find that you do not like what  happened with your taxes this year, why not work with a Fee-Only financial planner to ensure that next year is better? ©Bring Clarity to Your Finances™. Avoid Shock at Tax Time with Tax Planning is a post from Bring Clarity to Your Finances™

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Claire Emory, MBA, CFA, CFP®

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