2020 has been a hectic, life-changing, unusual year for many of us. I hope that you and your loved ones are safe and healthy. Many people are in a very different financial place than they were just 12 months ago. When there is a significant change in your income compared to last year, I recommend tax planning so that you are not surprised next year. Through proper planning and payments, you should also be able to eliminate under-withholding penalties assessed by the IRS. If you are making less than last year, you may be able to reduce your payments to the government. If you happen to be one of the lucky businesses that are having a strong year, then proper tax planning can also help you reduce your tax liability. I recommend that you consider tax planning if you received any of the following:
- Unemployment payments
- Your business received a PPP loan
- Your income changed by more than 10% compared to last year either up or down
- You received disability payments
If your answer is “yes” to any of the above questions, then tax planning could be beneficial for you. Reach out to your CPA and discuss this with them. If you are not working with a CPA and you own a business, we would be happy to provide a complimentary meeting with you to see how we can assist.