Why Complete A Mid-Year Tax Checkup?

30 April 2019
 Categories: , Blog

As summer approaches, most Americans take time off from thinking about their taxes. But, in reality, summer is a great time to do a mid-year tax checkup. What's the benefit of a tax checkup? And what should you discuss? Here are a few answers.

Why Check in About Your Taxes? 

Your tax bill is the accumulation of an entire year's worth of financial decisions and activities. It includes changes in your income, purchases and sales of assets, changes in family structure, external changes in tax rules, and choices about where to put your money to work. 

Unfortunately, most people only look at those activities at the end of the year, when they've already done them — or even worse, after the year is over. Instead, take the time to update your tax preparer on changes in your life or finances when there's still time to make changes. And this is a good time to consult about potential future decisions too.

What Should You Talk About?

At a mid-year checkup, start by discussing with your preparer any changes that have occurred in the current year. This would include buying or selling a home, caring for others in your family, getting a raise, starting a new business, going to school, moving, or any large expenses incurred. 

You should also discuss your refund or tax bill last year and what you'd like to see it look like this year. Ask the preparer to assess your current income and withholding as to how it compares to an estimated tax bill.

Ask about changes to the tax law, both federally and at the state level. In recent years, there have been large-scale changes to many tax rules that affect individuals and small businesses. Find out what's been finalized or debated since last year that might impact your tax situation. And ask about expected changes for the next year — both within your own situation and with the tax law. 

What Should You Do Next?

Once you know what your tax situation is likely to be, look for ways to improve it. This might include adjusting the timing of some expenses or sales, re-balancing your investment portfolio, increasing retirement contributions, or increasing the deductions in your small business. Implement what you can over the next few months.

Just as a physical health checkup keeps you in good shape, a tax checkup keeps you in good financial shape. So schedule a tax consultation today with a local preparer like Monheit Frisch CPAs PLC