Growing Savings and Reducing Stress with Strategic Year-Round Tax Moves
Tax season is a recurring event that requires careful planning and timely action from both individuals and business owners. However, focusing on the benefits of year-round tax planning can be even more effective. By staying proactive and thinking about taxes throughout the year, you can avoid penalties, streamline the filing process, and take full advantage of tax-saving opportunities. In this article, we’ll outline key dates on the year-round tax planning calendar, showing you how this approach can enhance your financial health and help you manage your tax responsibilities more efficiently.
March: When Tax Season is Upon Us
Most of us are already thinking about taxes at this time of the year – whether we want to or not! So, March serves as an opportune time to begin your year-round tax planning efforts if you haven’t done so already.
Take these steps to get started:
1. Review and Organize Financial Records
The tax season is about to intensify, so take this month to gather and organize all necessary financial records. Think about things like income statements, expense receipts, and relevant documents required for deductions and credits.
2. File Business Taxes (Partnerships and S Corporations)
This step won’t apply to everyone, but businesses structured as partnerships or S corporations must file their tax returns (Form 1065 or Form 1120-S) by March 15th. Keep your financial records accurate and complete to facilitate a smooth filing process with no hiccups.
April: Don’t Forget Individual Tax Filing and IRA Contributions
The deadline is here! April is synonymous with individual tax filing, and it can make you sweat if you aren’t prepared. This is another smart reason to practice year-round tax planning.
Here are a few critical deadlines to remember for this month:
1. Individual Tax Filing Deadline
Individual taxpayers must file their federal income tax returns (Form 1040) by the traditional April 15th deadline. If you need more time, consider filing for an extension, which grants an additional six months to submit your return.
2. IRA Contribution Deadline
Take this opportunity to bolster your retirement savings if you’re able! April 15th also marks the deadline for contributing to Traditional and Roth IRAs for the previous tax year. Review your contributions and, if you haven’t maxed them out yet, take advantage of this opportunity to maximize your retirement savings and potentially reduce your tax liability, as well.
June: Estimated Your Tax Payments and Get Quarterly Filings In
If you’re a business owner, freelancer, or consultant, summer is the time to think about your estimated tax payments and quarterly filings.
1. Estimated Tax Payment (Individuals)
If you earn income that isn’t subject to withholding (such as self-employment income from freelancing or consulting or rental income), June 15th is the due date for making your second estimated tax payment for the year.
2. Quarterly Payroll Tax Filings (Businesses)
Businesses with employees must file quarterly payroll tax returns (Form 941) by the end of June. Make efforts to accurately report wages, withholdings, and other employment-related details.
September: Don’t Neglect the Extended Individual Tax Filing Deadline
As mentioned above, taxpayers can file for an extension if they aren’t ready to file their taxes in April. September brings a second chance for individuals who requested a tax extension earlier in the year, and it’s essential not to miss this deadline.
1. Extended Individual Tax Filing Deadline
Taxpayers who filed for an extension have until September 15th to submit their federal income tax returns. Make the most of this extension by thoroughly reviewing your return and seeking potential deductions.
October: Remember Retirement Account Deadlines
As the year winds down, take note of critical retirement account deadlines. They can play an important role when you’re goal is to take advantage of the benefits of your year-round tax-planning.
1. Retirement Account Contributions
For self-employed individuals and small business owners, October 15th is the deadline to establish and fund a Simplified Employee Pension (SEP) IRA for the previous tax year.
December: Make Your Year-End Tax Planning Moves and Charitable Gifts
Even though the calendar year is winding down – and the holiday season may be in full swing – your tax planning work may not be done. Consider these steps before the New Year arrives:
1. Year-End Tax Planning Considerations
Take time for year-end tax planning to assess your current financial situation, explore potential tax-saving strategies, and make any final contributions to retirement accounts. These moves can help you enhance your financial health for the year ahead.
2. Charitable Contributions
If philanthropy is important to you, December is an excellent time to make charitable contributions that may also lead to tax deductions. Make any donations by December 31st to qualify for the current tax year. Note that many non-profit organizations must have the money in-hand by December 31st – not simply postmarked by that date – so be sure you meet the deadlines of your favorite charities.
Enjoy the Benefits of Year-Round Tax Planning and Enhance Your Financial Health
Navigating the complexities of tax deadlines requires careful attention and strategic planning. At B.A. Schrock Financial Group, we recognize the benefits of year-round tax planning in optimizing your tax strategy and reducing your tax burden. Staying organized and meeting key deadlines is essential not only for managing your finances efficiently but also a smart step to enhance your financial health. With tax laws and regulations constantly evolving, it’s important to stay informed and work with a trusted financial advisor. Customizing your tax planning to fit your unique financial situation is vital to achieving your financial goals and enjoying long-term success.
If you’d like to discuss your personal financial situation and explore how we can assist with your year-round tax planning efforts or strategies to minimize tax burdens, please reach out! Contact us today and let us help you gain confidence in your financial future through our client-centered approach. We look forward to hearing from you!
