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Tax Time in the Summer?

Colleen Hornbacker

How planning in the summer can lead to savings next spring

Most Americans don’t spend their summer months thinking about taxes. Once April 15 is behind you, your mind turns to more cheerful subjects and you take a much needed break from worrying about what you owe to old Uncle Sam. Yet while you may view filing your taxes as a seasonal obligation that requires attention just once each year, the truth is that effective tax planning begins long before April 15.

Why is the summer important for tax planning?

Tax planning isn’t so much a seasonal activity as it is a strategic timeline. Your spring tax filings are generally nothing more than required reporting for taxes due from the prior year. They are a statement of what has happened in the previous year, including income earned, expenses and deductions and even investments and incentives available. By the time your tax filings are due, most opportunities for savings have passed. While most Americans participate in tax compliance every year, far fewer take advantage of the many opportunities for tax minimization that tax planning can uncover. Unless you want to pay more tax than required, proactive tax planning now is essential.

What should you do now to maximize savings later?

Tax planning is a process that is unique to each tax payer. What is right for one individual or business owner may not be right for another. Your situation, opportunities and objectives will help your advisor find the best plan for you.

The most important thing you can do is schedule a time to sit down with your tax advisor. Be open and forthcoming about your current financial situation, future expectations and any and all business dealings. Understanding your current situation and your future plans will allow an advisor to develop the best strategy to minimize your tax liability and maximize your wealth.

Find time to sit down with your tax advisor sooner rather than later to avoid paying more than necessary next spring.