Business Tips

Why It Is More Important Than Ever to Review Your Tax Liabilities

March 27, 2019

Up until this tax season you might be able to look at your net gains, losses, charitable deductions, and expenses to fairly accurately estimate how much might be owed in taxes. Since the start of 2019, there has been a major overhaul in the US tax code. While those who belong to higher tax brackets seem to be faring better, it is also true that a lot of costs that could normally be deducted have been totally eliminated. Deductions for interest on real estate tax has been reduced, severely impacting those living in certain high cost areas. Those just getting into investing need to review their tax liabilities probably more than anyone else. You should review your tax liabilities so that you don’t get an unpleasant surprise when filing.

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New Tax Laws Every Year

There may have been a big change to the federal income tax code this year, but there are also minor changes made on pretty much an annual basis. Berger Financial Group income tax planning experts know about these changes and updates as soon as they occur. They can help you to structure your financial portfolio so that you don’t end up paying more in taxes than you have to. Moreover, they can also advise you on future investments so that your savings and profits are always maximized. Since you can count on new tax laws and rules being introduced yearly, why not ensure that you always get sage advice?

Fluctuating Income Means Different Tax Brackets

One of the reasons that anticipating tax liability is hard is because people pay different tax rates based on their income. So, someone who made $50,000 in investments will likely end up in a different tax bracket than another investor who made $90,000. A business owner could owe more than a W-2 wage earner, but then end up better off because of various deductions. Investors generally have fluctuating income levels. Try to estimate how much you will owe in tax by running the numbers throughout the year.

Making Changes Now Can Help You Save Next Tax Season

Say you made some errors this year that end up costing you dearly. Perhaps your accountant can amend your taxes or maybe you can pay your tax bill over a few months so that you don’t also owe a penalty. Whatever you do, review how you have everything set up now in anticipation of the next tax year. Are you paying quarterly estimated taxes? How much is being withheld from your paycheck? Lastly, do you have the correct number of dependents indicated on all of your paperwork? These important changes will not only help you to receive the most cash but also will prevent you from being saddled with a massive tax debt each spring.

If you don’t take a look at the numbers early on, you could see all of your profits going right to the government. Everyone has to pay their fair share of taxes, but that doesn’t mean that your investment profits need to go up in smoke. Prepare, plan, check, and then re-check so that you know what your tax liabilities are.