You can choose when to pay some of your taxes. I touched on this issue last week Thursday when discussing bonus depreciation for businesses. Individuals need to think hard about tax planning, too, with future individual tax rates likely to rise.
For many years, the mantra was to defer taxable income and accelerate expenses. Except for those hit by the Alternative Minimum Tax (AMT), the theory worked well. You have control on when certain items (property tax, contributions to charity) are paid and are thus, deductible. Time value of money says to take your cash now, so we happily deferred our tax bill with a little planning.
Depending on your tax bracket, deferring taxes is not the default choice anymore. You now need to consider future tax increases into your tax plan. Today’s savings could cost you dearly the next year. Think of poor tax planning as a high interest loan on foolishness.
I can not give specific advice in a blog. The tax code is changing too much for me to give blanket advice. You can keep your tax bill within reason if you take steps to protect yourself. Talking to your friendly accountant April 10th is not taking appropriate steps. The time for action is now. I don’t care who your tax pro is; call them now and set an appointment to review your tax status. You would be amazed at the things I come up with to help clients that come in now. Come spring, you just pay the revenuer.