If you’re wondering when a good time to start tax planning is, it’s now. Tax planning season has begun! Those who treat tax filing as an event and not a process often pay more than they need. So, how do you go about moving from the event to planning? By looking at triggers that should stimulate a discussion. Here are some of the more common:

Twelve common tax planning triggers

1. You owed tax last year. A surprising tax bill is never fun. So, if you owed taxes last year, project your current-year obligation with a bit of planning if you have not already done so.
2. Your household income is over $150,000 single and $200,000 joint. As your income grows, so does your tax bill. This occurs because tax rates increase and tax benefits phase out, including lower child tax credit amounts, increases in capital gains tax rates, higher income tax rates, Medicare surtaxes, and more.
3. You are getting married or divorced. The tax penalty for being married is higher than ever. Are you prepared? If you are going through a divorce, then not all assets are the same in the eyes of the IRS.
4. You have kids attending college in the next few years. Several tax programs can help. You may wish to review your options and their impact on your tax return.
5. You have a small business. Considering depreciation benefits, qualified business deductions, and numerous small business tax credits would be best. A review is critical if your business is a flow-through entity. For example, a Sub Chapter S, a partnership, or a sole proprietorship, as these entities are taxed on your personal tax return.
6. You plan on selling investments. Capital Gains tax rates can now range from 0% to 37% (or even higher with the Net Investment Tax).
7. There are changes in your employer-provided benefits. These changes could impact your taxable income this year. It is especially important if you are provided with high-deductible insurance options.
8. You buy a home, sell one, or go through home foreclosure. Significant tax benefits exist in your home, but only if you know about them and plan accordingly.
9. You have significant medical expenses. It is more challenging than ever to itemize deductions, but one way is possible if you have a significant medical expense. In the event this does occur, it is time to review all itemized deductions to minimize your taxes.
10. You recently lost or changed jobs. Understanding the tax impact of unemployment benefits is crucial.
11. You have not conducted a tax withholding review. To avoid under-withholding penalties, you need to ensure your withholdings are sufficient.
12. You have not done a review of your estate in the past 12 months. Recently passed estate laws and potential changes in these rules make an annual review necessary.

When to start tax planning

Now is the time! If any of these triggers apply to you, please schedule a tax planning appointment today. Contact our RRBB advisors if you have any questions.