Tax Planning: There’s still time!

November is the perfect time to take a look at your financial situation and make changes, if necessary. Your tax situation should never be a surprise—so, if your income varies during the year, or if you’ve had a major life change, you could be in for a large tax increase or decrease.

Your CPA can look at your history, alongside your current state of affairs and formulate a plan to ensure that you know what’s coming on April 15, and in many cases, mitigate the effects of any changes to your advantage.
Here are a few red flags that indicate you might be in for a tax change for 2012:

  • Marriage or Divorce: A change in filing status can help or hinder your tax liability, depending on what other factors affect your tax return.
  • Birth of a child: Congratulations! If you have a child on or before December 31, 2012, you are eligible for the child tax credit of $1,000. There are limitations and exceptions, so consult with your CPA.
  • Dependent in college: You may be eligible for a variety of education credits, depending on your tax situation. Be sure to keep track of all of your college expenses!
  • Job loss or new job: If you’ve lost or taken on a different job in 2012, your withholding may be skewed. Your CPA can take a look at what you should expect to owe or be refunded.
  • Fluctuating income: Small business owners are extremely susceptible to a variance in income throughout the year. Make sure your estimated payments are adequate, as the last estimated payment is due January 15, 2013!

There are many more situations that could cause issues in your tax return—that’s why now is the perfect time to schedule a consultation with your CPA. The most important thing to remember is that each tax return is different and is affected by the various credits, deductions and rules differently. Be sure you feel comfortable with your CPA to ensure your financial life is covered!

In accordance with IRS Circular 230, this newsletter is not to be considered a “covered opinion” or other written tax advice and should not be relied upon for IRS audit, tax dispute, or any other purpose.

On November 13, 2012, posted in: Tax & Accounting Tips by