We are now into the fourth quarter of 2011. Now is the time to be thinking about year-end tax planning. This is the time of year where both individuals and businesses can both benefit from a little bit of planning. A client can take the necessary steps to minimize those taxes or set the money aside that they are going to owe. By planning before year-end a taxpayer can know where they will approximately stand come April 15th. Below are some things that can be done by individuals and businesses.
1) W2 employees should take a look at their year-to-date paystubs and see what their income is and project what it is going to be at year end for both income and withholdings. By doing this now, a taxpayer that normally receives a big refund when they file their taxes could adjust their withholdings at their place of employment and therefore receive the money throughout the fourth quarter as opposed to giving an interest free loan to the government until April 15th.
1) Payroll – Has the owner done a salary to themselves yet? (especially comes into play for S-Corporations) Are there family members that could be on payroll for certain tax advantages? Does the owner want to reward employees for their efforts with bonuses?
No individual or business owner should go down the road with blinders on when it comes to their business planning and tax planning. Set yourself up a tax planning appointment in the fourth quarter and have the peace of mind you know where you will stand on April 15th.