Tax Planning
Hello all!
We’re continuing to move forward with our monthly planning topics. This month is all about taxes! Why so early you ask? Because right about now you’re getting a whole bunch of mail that you need to pay attention to, and if we can get you to start your stack and begin uploading things to your CPA then you’ll be ahead of the game come April.
This month, I asked a tax professional to send us thoughts from their perspective. I hope you enjoy!
Happy tax season!
Hopefully, you aren't ignoring all things tax-related. After all, tax advisors are people too. And we get worried when we don't hear from you � Gathering tax forms You may have received several tax forms in the mail over the past couple of weeks – including a Form 1099 from Schwab reporting your investments managed by White River Investments. Contact the office if you haven't received your Schwab 1099 yet, and they can provide it for you.
The deadline for banks to send Form 1098s (mortgage interest) and 1099 (for interest, dividends, and other income) was January 31. However, you might still be missing other brokerage 1099s or potentially some K-1s.
Even though brokerage tax forms are supposed to be sent out to taxpayers by February 15, firms commonly receive an extension to file. Generally, these 1099s are sent out by the end of February.
Just because you've received your 1099s doesn't necessarily mean you're ready to file your tax return. Adjustments can be made to these brokerage Form 1099s. So, consider holding off on finalizing your tax return to avoid needing to file an amended tax return.
If you're invested in any partnerships or other business ventures, your K-1s may not be ready for a while. If the business or partnership files for an extension, you might have to wait until late summer or early fall to get a finalized K-1. Reach out to your contact at the investment to inquire about timing. If the company plans to file an extension, ask for a draft K-1 to use in calculating your own extension.
Working with a Tax Advisor
Tax software has advanced significantly over the past years. If your tax situation is straightforward (e.g. W-2 from a job, some 1099s for investments, and deductions like mortgage interest), you can likely prepare and file your tax return on your own.
However, some tax situations are still best handled by a tax advisor – such as if you have a small business or complex investments.
If you've been working with a tax advisor, see if they can provide a "tax organizer". This is a packet produced by professional tax software that provides a checklist of what forms your tax advisor expects to get, plus questions about any changes to your tax situation.
I won't sugarcoat it, filling out a tax organizer can be a pain. But it can uncover potential tax deductions and credits you're eligible to receive – plus keep you on the right side of the tax law on any disclosures you need to make.
If you're too busy, just send the tax forms you've received so far and ask your tax advisor what is still needed to file your tax return. Just note that this back-and-forth may lead to a higher fee.
Important Dates To Remember!
If you need a new tax advisor, best to get recommendations and start making calls now, these folks get busy!