Tax Planning in Q4: 5 Things You Should Consider

September 27, 2016

Tax Planning in Q4: 5 Things You Should Consider

Tax planning should be a year-round reality. If you’ve fallen behind on this important task, it’s time to catch up.

School’s started again. Halloween merchandise is in the stores. The leaves are starting to turn and the days keep getting shorter. December is still a ways off, but you know how fast the last quarter of the year goes. So you’re probably starting to think about all of the financial minutiae that has to be wrapped up by the end of the year.

Income tax preparation for the 2016 tax year may not be at the top of your mind just now, but it really should be. You’ll have enough on your mind as January 1 approaches. So take some time now to do what you can to minimize your IRS obligation. Here are some ideas.

Adjust estimated taxes based on financial data from the first three quarters.

Calculating your quarterly estimated tax obligation is probably one of your more challenging accounting chores. Have you developed a good system for coming up with that every-three-month figure, or are you regularly—unpleasantly—surprised at tax preparation time? Unless you’re in a seasonal business where fall and winter are your heaviest selling seasons by far, you should be able to create some projections for the 4th quarter now based on reports from January-September 2016. This will give you some time to do any adjusting necessary.

If you don’t have a good method for calculating this important number, let us help.

If your income looks like it won’t be offset by deductions, consider investing in some needed equipment before December 31.

Don’t buy stuff just for the sake of buying stuff to get a deduction. But if you’ve been putting off an acquisition, you might think about following through on a needed purchase now.

Did you or your company go through any major changes in 2016 (opened a home office, hired staff, sold residential property, had a child, etc.)?

Any changes in the basic structure of your family or business is likely to have impact on your income taxes that you may not anticipate. Get in touch with us, and we can advise you.

Will you have to report capital gains for the year? You might consider selling some investments that have performed poorly in order to report a loss.

This is complicated stuff. And if you don’t understand it, we can explain the tax impact of changes in your portfolio.

How’s your charitable giving been this year? The 4th quarter is a good time to donate cash or non-cash items to tax-exempt organizations.

Your generosity is tax-deductible.

All of these suggested activities will be easier—and probably more effective and accurate—if you let us run some critical reports and make recommendations based on what we learn from them. Your income taxes can’t be prepared, of course, until the IRS finalizes its 2016 forms in January of 2017. But if you want to minimize your tax obligation for this year, now is the time to take action.

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