The Benefits of a Year End Tax Planning Meeting

The Benefits of a Year End Tax Planning Meeting

The purpose of year-end tax planning is to project your tax liability for the current year and then identify opportunities to reduce or eliminate that tax burden before the year is over. Bottom line – a year-end tax planning meeting can save you money.

Dan DeHoek
CPA | ABV | CFP
DeHoek & Company, PLLC

For many of my tax clients, especially those who own a business, year-end tax planning can pay big dividends when the tax return is completed early the next year.

If a client has recognized substantial capital gain income in the current year, I often can identify other capital assets that represent unrealized losses and divest of those assets before year end to offset the capital gains generated elsewhere which reduces net taxable income.

When to Schedule Your Meeting?

Typically, the best time for a planning meeting is between mid-October and December 24, yet scheduling early as possible gives you more time to take tax-saving action. It also may increase the number of actions you can take.

For example, let’s say I project that you will have a large amount of income without many off-setting expenses. I may advise that you purchase needed equipment before year end to offset the income. But if you didn’t schedule your planning meeting until late December, you may not have time to order and pay for new equipment before the end of the year.

Some of the many tax-saving strategies include:

    • Divesting assets that represent unrealized losses to off-set capital gains
    • Restructuring income
    • Purchasing needed equipment earlier than planned
    • Delaying the receipt of year-end payments from customers until early the following year
    • Expediting the payment of expenses
    • Contributing to qualified retirement plans –such as 401(k), 403(b), 457(b), IRA, and SEP
    • Contributing to a church or charity
    • Identifying deductions

    Lastly, if a client has desires to make contributions to a church or charity, they can accomplish two purposes once again by assisting the charity and reducing their tax liability as long as the contribution is made prior to year-end.

    If you’ve never scheduled a tax planning meeting, you may be wondering if the tax savings will be more than the fee for the service.  I can tell you that my clients who have started meeting with me prior to year-end continue to do so every year. They have recognized not only tax savings but also enjoy both the strategic nature of the meeting and the peace of mind it gives them, not to mention, valuable information about what they can expect to pay or receive back on tax day.

    Without a year-end planning meeting, with the exception of a very short list of strategies to reduce your tax, there isn’t much I can do to help our clients save on taxes. At that point, our work is determining what the final income statement and balance sheet looks like on December 31 and then reporting those numbers appropriately on the tax forms.

    Now is the time to perform year-end tax projections and planning and we are scheduling appointments with our clients starting next week through November. If you are a current client or a potential client and would like to schedule an appointment to discuss year-end tax planning, please contact me.

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