picture of tax withholdings form

Prepare Now for Next Year’s Tax Bill

by Aug 10, 2022Tax Accounting

Reviewing your taxes should be an on-going habit to manage next year’s income tax liability and to discover any surprises.

Looking over your taxes and finances in Summer generally still leaves you time to adjust and implement strategies to improve next year’s filing.

This is especially recommended if you’ve had a big life event or if you expect a life change by the end of the calendar year.  If you’ve had a marriage or a divorce, a birth or a death in the family, bought or sold a home, or a raise or a new job, your tax liability could be very different for this year’s income tax filing.

1) Review your W-4

When you started your current job, you filled out a W-4 form to instruct your employer how much to withhold from your paycheck for taxes.

It’s good to look at the withholdings a few months into a new job and twice a year going forward.  If you’ve had a major life event such as getting married, having children, or buying a house, it’s especially critical to check-in on your expected tax liability and update your W-4 to have the appropriate taxes withheld.  You want to make sure you are withholding enough, and not withholding too much.

If your tax withholdings aren’t on track, there’s still time to adjust withholdings or estimated payments.

2) Contribute to 401(k) or IRA

If you have room in your budget, contributing to pretax retirement savings 401(k) or a traditional IRA will decrease your adjusted gross income. This can reduce taxable income which can ease your tax liability.

(A Roth 401(k) or a Roth IRA are taxed upfront and do not lower adjusted gross income.)

3) Check Taxes Owed on Side Hustles or Unemployment

Any income you’ve made from a hobby or a side hustle is considered taxable income.  Any unemployment payments you may have gotten are also subject to income taxes.

4) Sell your losing stocks

If you own stocks, you likely have at least one that isn’t performing well.  If you sell your losing stocks for a capital loss, that capital loss can be used to offset any capital gains.  This is a strategy called tax-loss harvesting.

If you don’t have capital gains, the losses can offset up to $3,000 of ordinary income.  Losses beyond the $3,000 max, can carry over to future years.

Avoid Tax Surprises

Don’t wait until April. For help with your income tax planning and preparation, taxes, give us a call.

CPA Firm, Griffin & Furman, Expands Footprint in Louisiana

Baton Rouge, Louisiana (October 6, 2022) – Griffin & Furman, LLC, certified public accounting firm, is expanding its footprint in Louisiana with the addition of a Baton Rouge office. Effective September 16, 2022, Michael R. Choate and Company CPAs merged into...

Two Promotions at Griffin & Furman!

Thanks to their individual initiative, two of our team members have recently received promotions within Griffin & Furman.   We strive to recognize leadership in our team members, and because of their enterprising spirits, we have recently promoted Linda Alford to...

Prepare Now for Next Year’s Tax Bill

Reviewing your taxes should be an on-going habit to manage next year’s income tax liability and to discover any surprises. Looking over your taxes and finances in Summer generally still leaves you time to adjust and implement strategies to improve next year’s filing....

What is “Full Retirement Age”?

“Full retirement age” was established at 65 years of age in the Social Security Act of 1935, but since 1935, our life expectancies have improved, the Social Security program has evolved, and “full retirement age” is now different for everyone. What is full retirement...

Can I reimburse myself this year from my 529 for last year’s tuition expenses?

My daughter starts college this fall, but her 529 has lost some earnings in recent months. Can I leave the money in the 529 to give it a chance to maybe recoup some of the losses? Then reimburse myself later in 2023 for tuition expenses paid in 2022?The short answer...