Very simply, tax preparation is an annual filing of taxes you paid all year to ensure you paid what you should have. Your accountant reconciles what you paid versus what you should have paid. The result is to either receive a refund or pay any additional amount. And tax planning can help change this outcome.<\/p>\n\n\n\n
The government sets a tax percentage that applies to various brackets of income. In the U.S. we have a progressive income tax system meaning that you pay a higher rate of tax on your income as the amount increases. So, while your last dollar earned may fall in a higher tax bracket that doesn\u2019t mean every dollar is taxed at that amount. Your first dollars are taxed at lower rates. Then higher amounts are taxed at the rate for the bracket they are in. <\/p>\n\n\n\n
You can complete your own tax preparation or have a professional do this for you. You need to compile documents that confirm your annual income and certain expenses that are deductible. These documents are provided to you by a variety of sources; your employer, financial institutions, charitable organizations, or even medical providers. The most efficient way to complete this process is to do so electronically. The IRS still accepts paper documents but it takes longer to process if you file with this method. <\/p>\n\n\n\n
No one likes to be surprised with an unexpectedly high tax bill. So planning ahead can eliminate unneeded worry, stress, and uncertainty. Tax preparation is not just something we think about once a year. There are considerations you need to keep in mind during the entire year that affect the overall taxes you owe. It\u2019s for this reason we work with clients to review their tax projections before the end of the year. When you plan ahead you can take advantage of any opportunities available to you. If you know you\u2019ll owe a large amount in taxes we can look for planning strategies that apply to you. <\/p>\n\n\n\n
Many people want tax preparation services to file this year\u2019s tax return as well as know ways they can be saving more too. Tax planning is a very common area that is not included in a typical year- end tax preparation fee. You need to ask your tax preparer to do this for you and it typically happens during the second half of the year. Once you have a good idea of the income you\u2019ll receive such as any expected bonuses and employee benefits we can set a plan. When we pair your expected income with any planning strategies we can give you a good idea of whether you\u2019re on track with your paycheck withholdings. By planning ahead you\u2019ll have time to update your withholdings so you\u2019re on track by the end of the year.<\/p>\n\n\n\n
The level of tax planning you need depends on the complexity of your total compensation. If you receive a variety of benefits in different years, tax planning would be very valuable to you. Some people receive stock compensation or large bonuses that vary year by year. With the changes in income it\u2019s important to plan for the timing of when you\u2019ll receive that income. Rather than receiving income as it comes you can plan ahead to optimize the taxes you will owe.<\/p>\n\n\n\n
The timing of employee benefits received and the tax strategies implemented are usually the biggest factor to understand. Many times if you can receive income in a new tax year rather than <\/p>\n\n\n\n