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An End of Year Tax Checkup May Be Appropriate

Taxes are similar to vehicles in that they sometimes need a check-up to make sure they are performing as expected. That is especially true for 2018, with all of the changes brought about by tax reform. As we approach the end of the year, looking at your overall tax projection for 2018 will more than likely be necessary in view of the new changes to avoid surprises and penalties.


Here at Curran, we offer tax services and find it essential to make sure our clients understand their whole tax picture heading into yearend to avoid any big surprises such as a large unexpected tax bill! We help plan around them and offer efficient tax strategies to help mitigate taxes owed.

One area of major concern is the amount of taxes individuals are withholding from their wages. Tax reform was passed late in 2017, and there was a considerable amount of confusion among employers related to the amount of taxes to withhold in 2018. It took the IRS a couple of months to come out with a revised Form W-4 (Employee's Withholding Allowance Certificate) and withholding tables, and even then, there were concerns about whether the revised and more complicated W-4s were being filled out correctly by employees and whether the revised W-4s were actually being submitted to employers at all. The IRS has even been issuing notices cautioning taxpayers to be sure they are withholding enough.

While most people will see an overall tax reduction as a result of the tax reforms, the amount of their refund or tax due hinges on the amount of pre-payments, which include withholding and estimated tax payments. All this confusion related to withholding can lead to unpleasant surprises at tax time. If you count on a refund each year, it might be appropriate to have this office run a year-end tax projection to ensure that the projected refund will be as expected.

This is also true for retirees receiving pensions and Social Security benefits and for self-employed taxpayers who are making pre-payments via estimated taxes. You obviously do not want to pay too much and generally don’t want to end up with a huge tax liability. An end of year checkup will allow adjustments to the 4th-quarter estimated tax payment so that the end result will be as desired.

Married couples with two working spouses, individuals with multiple jobs and situations in which taxpayers are both wage earners and self-employed cause the most difficulty in getting the prepayments correct. There are a number of other circumstances that can impact your taxes, and you probably should not wait until tax time to see the results. You could even be missing opportunities to decrease your prepayments and obtain more cash flow. With year-end tax planning, you may be able to take steps to mitigate the tax impact of certain events and thus avoid unpleasant surprises before it is too late to address them. Here are some events that can significantly impact your tax liability:

  • Getting married or divorced, or becoming widowed
  • Changing jobs or your spouse starting to work
  • Having a substantial increase or decrease in income
  • Having a substantial gain from the sale of stocks or bonds
  • Buying or selling a rental property
  • Starting, acquiring, or selling a business
  • Buying or selling a main or vacation home
  • Retiring or going to retire this year
  • Being the beneficiary of an inheritance
  • Giving birth to or adopting a child
  • Making significant business purchases
  • Having substantial investment income or gains from the sale of investment assets
  • Making unplanned withdrawals from an IRA or pension plan 

If you anticipate or have already encountered any of the above events or conditions, it may be appropriate to consult your tax advisor or your Curran Wealth Relationship Manager —preferably before the event and definitely before the end of the year.

Please consult your tax advisor or your Curran Wealth Management Relationship Manager. If you want to learn more about our options, or have questions about the various products and services we offer, please contact Curran Wealth Management.
518.391.4200 •
info@curranllc.com

The information herein is considered to be obtained from reference sources deemed reliable, but no representation or warranty is made as to its accuracy or completeness. No one connected with CIM, LLC or CIMAS, LLC can ensure tax consequences of any transaction.