You probably just filed your 2021 tax return a month ago or so, and you’re ready to put taxes at the back of your mind for at least a few months. This may not be your best thinking because, if you want to pay less in 2022, now’s the time to start planning.

What you do from now until December 31 of this year, can have a significant impact on how much income tax you’ll owe, or the size of the refund you can expect to receive, next year. That’s why here at SWC, we’re encouraging our clients to schedule a Mid-Year Tax Planning Meeting as soon as possible.

In fact, tax planning is becoming increasingly important for two reasons:

• First, thanks to inflation and other economic pressures, increases in income aren’t likely to keep pace with inflation. Saving on taxes may help alleviate some of that pain.
• Second, if any pieces of current administration’s tax plan are implemented, tax rates for both individual and corporate taxpayers could increase. Having a tax plan in place to account for these potential increases and maximize the deductions and credits for which you qualify, may help to counter some of those increases.

As you prepare for your Mid-Year Meeting with us, we encourage you to start thinking about the various steps you can take now to avoid any nasty surprises next year, including:

1. Consider adjusting your tax withholding or estimated payments
2. Get a grip on the timing of investment gains and losses
3. Take advantage of lower tax rates on investment income
4. Check your deduction strategy
5. Be prepared for issues related to virtual currency
6. Consider if a reverse mortgage is right for you

In this post, we’re going to cover all of the above and more. First up, tax withholding and estimated payments.

Review Your Tax Withholding or Estimated Payments

The U.S. has a pay-as-you-go tax system, meaning that citizens pay taxes as they earn money. Here’s what that means: Continue reading…