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If you haven’t paid your taxes yet, don’t panic.
If you are stressed and in a hurry, you are more likely to make mistakes. Take a deep breath and set aside some time to deal with your taxes in a clear mind.
We’ve put together five last-minute tax tips to help you avoid common mistakes, save money, and set yourself up for even greater financial success.
1. Know the facts
In the United States, personal tax returns must be filed by April 18, 2022. In contrast to 2020 and 2021, the IRS is meeting its deadline this year.
However, epidemic-related complications still need to be considered. Work with your tax advisor to review any incentive payments or advance child tax credits you receive to make sure you’ve received the appropriate amount.
If you have a Paycheck Protection Program loan, your tax advisor can work with you to ensure you follow IRS guidelines. Expenses paid with PPP loan income are tax deductible Even if your debt is forgiven, So don’t miss this.
Business owners can also benefit from another epidemic-relief program – Employee Retention Credit. It gives eligible employers a refundable tax credit for the employer’s share of the Social Security tax. In 2021, the credit was equivalent to 70% of eligible wages up to $ 10,000 per employee per quarter until 30 September. This means you may be eligible for a tax credit of up to $ 21,000 per employee.
2. Find a great tax advisor
If you don’t work with one now, finding a good one at the end of the game can be challenging. Still, invest time in your search. It’s not too early to think about your 2022 tax. A great place to start referrals.
Your tax advisor should be a trusted member of your asset strategy team. Find a CPA who will take the time to know you and your goals. The best tax advisors will use a proven strategy for permanent tax reduction that is aligned with your asset strategy.
3. Maximize the cut
There is no reason to pay more tax than you owe. Yet, we often see people doing just that because they are denied the right to discount.
Remember: tax cuts are not a loophole. Instead, the government has deliberately incorporated these incentives into the tax code to encourage the government to spend money on things it believes will benefit the wider community, such as building a business or investing in housing.
If you haven’t been tracking all year, take the time to review your financial transactions and other expenses. With each one, ask: How can this be discounted?
Cutting may include:
- Home office
- Charitable contributions
- Child care
- Student loan interest
- Education and training
- Business trip
Work with your tax advisor on this. Even so, there are still some opportunities to add to your 2021 cut by contributing to specific retirement plans – including IRAs and SEPs before April 18th.
4. See your state tax if you have a pass-through entity
Most U.S. businesses are a pass-through entity, or PTE, a type of business structure where business profits flow through the personal income taxes of owners and members. Some states have created an incentive in the form of an elective pass-through entity tax for these businesses, so it’s important to know the rules in your state.
Here’s how it works: The 2017 Tax Cuts and Jobs Act limited people to $ 10,000 for their state and local taxes. In states with an optional PTE tax, eligible taxpayers can transfer state income tax payments from individuals to entities, where the tax is fully deductible.
This is one of the many tax strategies you should be able to rely on your tax advisor to include in your plan.
5. Ask for an extension if you need
If you can’t complete a valid return by April 18, request an extension, but don’t wait for payment if you have excess tax arrears. All taxes will be paid on April 18 to avoid penalties and interest, whether extended or not.
If you can’t pay your full bills, talk to your tax advisor about the best strategy. Different waivers may be applicable to your situation and may help to reduce the penalty.