For many high-income earners, tax season is the finish line. Once a return is filed and a payment is submitted, one can go back to focusing on work and family things. But that is not the case with others.
Business owners and executives have to start business tax planning for the year-end and worry about taxes for the following year. There is complexity when it comes to tax planning and making tax decisions throughout the year. Contributing to the complexity is the fact that tax payments for high-income earners could be from several sources. There are all sorts of tax implications that need to be addressed. These can include income from a salary, bonuses, stock options, an investment, rental property, or a business share.
It is easy to miss the deductions, overpay, or defer taxes for a hit in the future. That is why year-round tax planning is vital. If a plan is made early, then such substantial business change or investment events can become less wallet-squeezing.
It is important for high-income earners to get all of their deductions and credits available to them. Some deductions phase out at high income, while some need proper timing or record-keeping to qualify.
For example, one saves taxes on retirement contributions by starting early in the year. Some deductions impact stocks while some asset separately. After December 31, there is almost nothing one can do to mitigate taxes!
At Safe Harbor CPAs, we suggest ongoing tax planning. We not only prepare but also assist our clients in managing today’s decisions that will impact tomorrow’s taxes. Safe Harbor CPAs can help assist startups create compensation plans and help the company grow.
