Archive for December 2012

Guaranteed way to get an instant tax return

Did you know that if you’re doing your financial and tax planning correctly, you can get your tax return instantly? Anyone can do it, with proper planning. Let’s take a look at how it works.

If I’m doing my job right with your financial planning, any money you see in the bank is money you can spend, not money you may owe the IRS. I would much rather allow for anomalies, because that leaves you much safer.

Otherwise, you might get to your tax return and owe another three thousand dollars. That’s a big deal for most people! So if I’m going to make an error, I make an error towards planning against that anomaly.

If something unexpected happens, you’ve covered a portion of it, if not all of it. And if nothing happens, and you have a refund, the money never goes away. And that’s the secret to an instant tax return.

Here’s what I mean.

If you plan it so tightly and you miss it and owe money, you instantly get a penalty. And that penalty is generally between 5% and 15%. So why not go ahead and make sure you don’t have a penalty? All you’re exposed to is that you lost some interest on the money while it’s out of your bank account and in the hands of the federal government.

In fact, that situation results in an instant tax refund! Let’s say you get to your tax return and you have an overpayment of $1,500. You intentionally overpaid. You rounded up on income and down on expenses to be safe.

Well, for the first quarter of the year you’re now in, you’ve been saving money to send in for your taxes for the first quarter. But because of the overpayment, you now have credit with the IRS.

So instead of sending the IRS $5,000 for the first quarter, you just send them $3,500 and tell them to keep the $1,500 overpayment. Then, just take the $1,500 out of the money you had saved up.

Instant tax refund!

Of course, that’s all contingent on planning throughout the year like we talked about last time. Planning in March, then in July, then in December, then doing it all over again.

How a small business owner should plan for 2013 taxes

December is always a huge, busy month for us. We do tons of appointments for year-end tax planning. We review things like income, tax withholdings, and everything that happened last year. It’s really the last gasp to make sure there are no surprises.

So what should you as a small business owner or self-employed individual do to plan for 2013 taxes? And what can you still do about 2012?

For someone that’s self employed or owns their own business, tax planning is critical. You absolutely have to do tax planning for the next year. Especially with what tax law is getting ready to go through in 2013!

There are tax rate changes on tap. They’re not going to stay where they are. I think Congress will do something, but I don’t know exactly what. Is somebody going to feel empowered? I don’t know. But it’s a safe bet that tax rates are going up for 2013.

Capital gains rates are the lowest they’ve ever been, other than zero. We like that, but we have to plan on how high they can be, not on how low they are now.

Really, we need to start your tax planning in February or March, looking at your tax return from the last year. That way, we have time to make changes, buy things, sell things, accrue income, accrue expense, whatever the case may be.

When you and I get together to plan, we base our plan partially on what happened last year. We review things like income, federal and state income tax withholdings, estimated tax payments, etc. All those things that change your tax return.

Next, we get together in July to touch base. Is everything going according to plan? Has anything unexpected happened?

Then you get together with me in November or December to make sure that everything went according to plan. That’s when we’re confirming the way we’re going to land at the beginning of the year.

If you’re concerned with your past year’s taxes, we’re running out of time. The ideal time, at the latest, to see me about year-end tax issues is early December. Don’t come see me on the 28th and expect me to pull out a miracle.

So if you’re worried about taxes for 2012, now is the time to take care of it. If you’re wanting to plan for the 2013 tax year, get in touch early next year, and we’ll get a planning session on the calendar.