Have you ever started to prepare to do your taxes or send information to your tax attorneys and found that you were delayed because you did not have one or more documents you needed? Not only is it frustrating, but it also delays the filing of your taxes. If you are getting a tax refund, that means it’s just another day or five that you have to wait for the money. This is probably the biggest reason to get a head start on next year’s taxes, but it is not necessarily the most important reason.
The Importance of Tax Planning
When you buy and sell big ticket items, this could make a big difference in the amount of tax you pay or in some of the deductions you can take. For example, if you plan on selling your house, but you have been in it for less than two years, you could pay more capital gains taxes than if you were to wait for the two-year mark.
For those who have a home office, you can still take deductions for home repairs and maintenance. If you are planning on adding a porch to your home or a half bath attached to your office, you can take those deductions for the current year if you complete them by the end of the year. Instead of waiting until February or March, you might consider having the work done in November or December. You might also claim depreciation on next year’s taxes for certain upgrades and equipment you added this year.
Exemptions
Last year (2019) was the first year that you could not take personal exemptions. However, the standard deduction increased. Previously, you could take as many personal exemptions as you needed. For example, the head of household could claim an exemption, plus additional exemptions for a spouse and children. Since you can no longer take five personal exemptions of about $4,000 for a family of five, your tax liability could be higher.
If you did not plan ahead least year, you may have received a lower refund or you may have even owed taxes. This year, adjust your payroll deductions accordingly, so that you do not have a larger tax liability. You should also find other deductions the new tax laws created that you might be entitled to.
Estate Planning and Taxes
If you visited an estate planning attorney for the first time to set up an estate plan, your taxes could change. Now is the time to review your estate plan and how it will affect your taxes. An estate planning attorney with tax experience at France Law can help you plan for any changes in how you file your taxes this year.
If you own more than $11,580,000 in 2020 and you decided to move some of your assets into a trust or gave some of your assets as gifts, this will not only affect the amount of estate tax you pay, but it also affects your yearly tax liability. And, if you already have an estate set up, you might make changes to the estate plan – depending on how your estate plan is set up – to mitigate this year’s tax liability.
Contact Tax Attorneys at France Law
The tax law changes constantly. Even if you have a low tax liability every year, you should use tax attorneys to help you mitigate that liability, especially if you own a business. Meeting with a business tax attorney well before it is time to prepare for your taxes helps you make decisions that benefit your tax situation. When your tax attorney is also an estate planning attorney, you get the benefit of ensuring your estate plan not only protects you should you become incapacitated or die, but you get the benefit of structuring an estate plan that mitigates your tax liability.
Whether you need to create an estate plan or you want to get a jump on next year’s taxes – or both, contact the tax attorneys at France Law for a consultation.