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S1E8 | Year-End Tax Planning

“Taxes aren’t just a thing that you let happen and figure out afterward. It really should be a planning game where you try to get all the pieces in place. When you do file your tax return, it's just reconciling the plan that you laid out. If you do it correctly, there shouldn't be any surprises at the end of the year. You should know exactly what you're getting back or what you may owe where it's a zero sum game.”

Tax season can be carefully planned to avoid headaches, and here to discuss tax planning is Matt Stead, Financial Advisor, Steve Sachetta, Sachetta & Callahan’s Director of Accounting and Tax, and Mike Callahan, the director of Wealth Management. 

Taxes can be complicated, and without knowing the rules, improperly filed taxes can take up extra time and cost you money. At the end of the year’s end, the main goal of tax planning is to accelerate expenses and not try to recognize or earn as much income in order to reduce tax liability.  Doing a tax projection before tax season arrives can help to avoid a giant tax bill at the end of the year, and possibly penalties and interest on top of that. There is forethought required to create a solid tax plan, but the peace-of-mind that comes with knowing exactly how much is owed in taxes, or how much can be returned, is worth the work.  

For this year’s taxes, there are certain things to keep in mind for people entering retirement  and people who have filed for unemployment.  For people transitioning into retirement, the withholdings totally change and a decision needs to be made as to how much to have withheld.  For those who have filed for unemployment this year, be aware that unemployment benefits are fully taxable!  The best advice is to do a tax projection and take into consideration all of your other earnings and make sure that the withholding is appropriate. Regarding investments, know the rules to capital gains and use them to your advantage in tax planning.  

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