It is never too early to begin preparing for the tax filing season. Individuals should be aware of any changes to their tax situation and make changes immediately. Otherwise it could cause major tax consequences.
- Have there been any major life events such as marriage, divorce, or the birth of a child? These are all changes that will affect your tax situation and should alert you to make changes to your Federal and State Form W-4s as soon as possible with your employer.
- Do you have a child starting college? Besides this being a major event in the family; the person who claims the student may be eligible to claim education credits. Adjusting the federal withholdings for the future tax years would increase the take home pay each pay period vs. a large refund at tax time. This makes sense since you may be assisting with that education bill.
- Maybe you or your spouse is going back to college? Depending on the circumstances, there may be tax credits available as well for you.
- Consider preparing a tax projection if your income has substantially changed from the prior year. This can avoid surprises during tax time and also provide you with opportunities to do some tax planning and decrease your income tax liability.
- If you are planning on increasing your charitable contributions or moving soon, plan for those itemized deductions. An increase in chartiable contributions can decrease your tax liability. If your move involves a new home, the increase in the mortgage interest will also decrease your tax liability. Likewise if you plan on decreasing these items; your tax liability will increase.
For more information about these items or any questions about the next tax filing season, please contact our staff at Wamhoff Financial Planning & Accounting Services. We are ready to assist you.