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Integrated Wealth Management

Time for a Mid-Year Tax Checkup

The last several weeks of summer are a great time for a tax review: It gives you plenty of time to make a course correction, and it can help you avoid any ugly tax surprises.  Here’s a list of things to think about and address with your tax and financial planners:

  • Major Life Changes: Children leaving home, marriage/divorce, or significant family gifting will all have a significant impact on your tax return.

For example, if you get married, you may have to set aside more for income taxes with the combined income.  Also, a child leaving home may leave you without a favorable tax deduction – causing you to have higher taxes as well.

  • Major Financial Changes: Career changes, home purchases and similar events also create planning opportunities.

If you have held more than one job over the course of the year, your income tax withholding could be well under where it needs to be.  Be sure to modify your W-4 so that you will be on track.

A new home mortgage may allow you to file your return with itemized deductions instead of the standard deduction – so you might have a whole new set of things you can deduct that didn’t meet the threshold before.

  • New Business or Philanthropic Interests: Take advantage of tax-advantaged accounts while you pursue your new endeavors.

Business owners can setup a 401K, SEP IRA, Health Savings or other account to save now, or at least avoid the year-end rush.  Those who are charitably inclined should consider funding a Donor Advised Fund with a highly appreciated investment rather than giving cash.

  • Sept/Oct Deadlines:  Even if you aren’t filing an extended tax return, there are a few other things that you can plan for in the coming months.

If you inherited an IRA in 2013, you have until September 30th to identify and deal with designated beneficiaries (otherwise you may lose stretch-out options, etc.).   You have until October 15th to undo a 2013 Roth Conversion (by recharacterizing).  And if you are filing an extended return, be sure to include those SEP IRA or Solo 401K contributions.

A little bit of organizing and planning now can save you a lot of stress (and quite possibly lower your tax bill) as the year comes to a close!