Mid-Year Tax Planning

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Mid-Year Tax Planning

The mid-way point of the year is here and it is a good time to take a moment to do some mid-year tax review to help you to plan for the 2022 tax season. Planning ahead can help you to avoid unexpected tax bills and allow you to make changes if needed. Here’s a general guide to help you with your mid-year review:

Review your 2021 tax return. Reviewing what hindered or helped your bottom line after the 2021 tax season can help you for the next one. That includes your tax bracket, tax rates on different types of income and your deductions.

Consider expected changes. You could be going through a life change like purchasing property or equipment or having a child, a change in business structure or an unexpected event in 2022 that may affect your tax status, rate, or deductions. When doing your mid-year review, consider if there are any changes that have occurred thus far, or you know may occur that will have an impact.

Estimate your anticipated income for the year. This can help you to determine your possible tax bracket and rates to estimate your tax liability. Having best- and worst-case scenarios can help you to ensure you have enough money saved for a potential tax bill or if you may need to pay quarterly taxes.

Plan retirement or charitable contributions. Once you have estimated your anticipated income, you may want to make some changes to your retirement contributions, make changes to your retirement accounts or adjust your charitable contributions to reduce your tax burden.

Remember your RMDs. In some instances, an individual may have a retirement account that requires an RMD, or required minimum distribution, and if you fail to make a withdrawal, it can lead to a penalty.

Need help with mid-year tax planning?

When tax planning, it is important to discuss your options with a qualified advisor. The team at MCK CPAs and Advisors can help. Contact us to help you navigate mid-year tax planning.