Insights + Resources

Tax Moves to Consider in Summer

Jun 14, 2019

Making changes earlier rather than later.

If you own a business, earn a good deal of investment income, are recently married or divorced, or have a Flexible Savings Account (FSA), you may want to think about making some tax moves now rather than in December or April.

Do you now need to pay estimated income tax?

If you are newly self-employed or are really starting to see significant passive income, you may need to quickly acquaint yourself with Form 1040-ES and the quarterly deadlines. Every year, tax payments to the Internal Revenue Service are due on or before the following dates: January 15, April 15, June 15, and September 15. (These deadlines are adjust if a due date falls on a weekend or holiday.) It might seem simple just to make four consistent payments per year, but your business income may be inconsistent. If it is, and you fail to adjust your estimated tax payment per quarter, you may be setting yourself up for a tax penalty. So, confer with your tax professional about this.1

Has your household size changed?

That calls for a look at your pre-tax withholding. No doubt you would like to take home more money now rather than wait to receive it in the form of a tax refund later. This past April, the I.R.S. said that the average federal tax refund was $2,864 – the rough equivalent of a month’s salary for many people. Adjusting the withholding on your W-4 may bring you more take-home pay. Ideally, you would adjust it so that you end up owing no tax and receiving no refund.2

Think about how you could use your FSA dollars before the end of the year.

The Tax Cuts & Jobs Act change the rules for Flexible Spending Accounts (FSAs). The I.R.S. now permits an employer to let an employee carry up to $500 in FSA funds forward into the next calendar year. Alternately, the employer can allow the FSA accountholder extra time to use FSA funds from the prior calendar year (up to 2.5 months). Companies do not have to allow either choice, however. If no grace period or carry-forward is permitted at your workplace, you will want to spend 100% of your FSA funds in 2018, for you will lose those FSA dollars when 2019 begins.3

You could help your tax situation by contributing to certain retirement accounts.

IRAs and non-Roth workplace retirement plans receive funds with pre-tax dollars. By directing money into these retirement savings vehicles, you position yourself for federal tax savings in the year of the contribution. If you make the maximum traditional IRA contribution of $5,500 in 2018, and you are in the 24% tax bracket, that translates to a $1,320 federal tax deduction for 2018.4

While it may seem far from April, this is an excellent time to think about tax-saving possibilities. You and your tax professional have plenty of time to explore the options.

Citations.

  • 1 – irs.gov/faqs/estimated-tax/individuals/individuals-2 [2/20/18]
  • 2 – fortune.com/2018/04/16/tax-day-2018-refund/ [4/16/18]
  • 3 – cnbc.com/2017/12/29/how-to-use-your-flexible-spending-account-funds-at-the-last-minute.html [12/29/17]
  • 4 – usatoday.com/story/money/taxes/2018/07/20/70-of-households-are-missing-out-on-this-important-tax-break/36835905/ [7/20/18]

Tags:

More Insights

Aug 16, 2019

Some of us share a common experience. You’re driving along when a police cruiser pulls up behind you with its lights flashing. You pull over, the officer gets out, and your heart drops. “Are you aware the registration on your car has expired?” You’d been meaning to take care of it for some time. For … Continue reading “The Cost of Procrastination”

Aug 14, 2019

Actor Lee Marvin once said, “As soon as people see my face on a movie screen, they [know] two things: first, I’m not going to get the girl, and second, I’ll get a cheap funeral before the picture is over.” Most people don’t spend too much time thinking about their own funeral, and yet, many … Continue reading “Put it in a Letter”

Aug 12, 2019

In a recent study, 35% of married couples described money issues as their primary source of stress. While there are many potential causes of such financial stress, in some cases the root may begin with habits formed early in the marriage. Fortunately, couples may be able to head off many of the problems money can … Continue reading “Money Tips for Newlyweds”

Aug 7, 2019

The journey to and through retirement occurs gradually, like successive chapters in a book. Each chapter has its own things to consider.

Aug 5, 2019

If you own an Individual Retirement Account (IRA), perhaps you have heard about Roth IRA conversions. Converting your traditional IRA to a Roth IRA can make a lot of sense depending on your situation. But remember, consulting with your financial advisor before making financial decisions is never a bad idea. Ready to learn more? Read … Continue reading “Roth IRA Conversions”

Insights + Resources >
We are preparing the questionnaire, please let us know through the contact page if you want to be notified when it's available.
Thank you.

Epic IMPACT Quarterly Newsletter

To Receive Our Quarterly Impact Newsletter:

 
Your privacy is important to us. We will not rent or sell your information.

Epic Market Commentaries

To Receive Our Market and Economic Commentaries

Your privacy is important to us. We will not rent or sell your information.

7 Steps for Investing with Impact

 
Your privacy is important to us. We will not rent or sell your information.