By: Alex Snyder, CFP®, Financial Planner
As 2024 is looming on the horizon, that means we are soon entering into tax season which can be a period of stress for people if they are not prepared and organized. Below are a few recommendations to prepare for tax season.
Review Tax Withholdings.
Annually update your tax withholdings to align with your financial circumstances, preventing underpayment or overpayment of taxes.
Review deductions and credits.
Ensure your tax preparer has all pertinent information to maximize deductions and credits. Keep records of any retirement plan contributions, gifts received or given, state and local taxes paid, mortgage or student loan interest, medical expenses, or property taxes.1
Not sharing information such as having or adopting a child, purchasing a ﬁrst home, or having qualiﬁed education expenses can result in your available tax credits not being optimized.
Review any stock option information.
If you had an employer stock option vest or sale this year with tax implication, ensure the tax form you are given has an accurate tax basis to calculate taxable income from the event.
Establish a game plan for taxes owed.
If additional taxes are owed beyond what was withheld through the year, have a plan in place for sourcing the necessary funds.
Meet with your advisor.
Financial planning is using money to meet a client’s goals over their lifetime. Investments, taxes, estate planning, and retirement planning all factor into ﬁnancial planning. Meeting with your advisor and talking through any ﬁnancial planning conversations that may have a taxable ramiﬁcation is important to do proactively and periodically. Topics like Roth conversions2, tax loss harvesting, or changing your investment portfolio can all aﬀect your tax return.
Tax planning is a year-round conversation and one that should be continually discussed to optimize taxes and position clients for ﬁnancial success in 2024. Take the initiative to organize your ﬁnances, stay informed, and consult a tax professional to help ensure a smooth tax ﬁling process in this upcoming tax season. At MCF, we are here to partner with you in ﬁnancial planning and tax preparation. Let us know how we can assist you on your journey to ﬁnancial success in 2024.
1 this is not an exhaustive list of deductions but provides a starting point.
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