There is still time to do some 2023 year-end tax planning, and this year that planning could be more important than ever.
Our 2023 Tax Planning Guide is now available. Of key interest: The IRS interest rate on underpayments has risen significantly, from 3% in 2020-2022 to 8% in the 4th quarter of 2023. This rate applies to the balance you owe next April if withholding tax and estimated tax payments are not timely enough for you to be considered ‘penalty-proof.’
In past years, it has been more economical for our clients to pay the IRS a small penalty than to invest time and energy in hiring us to do tax planning. However, what previously cost on average $30-$120 in penalties on a $4,000 underpayment will now result in penalties of $80-$320!
Therefore, if you’re concerned about a potential April tax liability, it may make more sense than ever to do some tax planning before year end.
Also, if you’ve experienced any major life events during 2023, you might benefit from year-end tax planning as well. We strongly encourage you to reach out to us if you’ve experienced any of the following major life events this year:
• marriage/divorce
• birth of a child
• launching college-aged children
• significant changes in income
• sale of property/investments
Of additional note in our 2023 Tax Planning Guide are the 2024 tax brackets. One the continued “good” sides of inflation is that income brackets for various tax tax rates continue to increase. This means taxpayers making more in 2024 will still find ‘more’ of their income taxed at lower rates.
We value the opportunity to help make your life #LessTaxing. Never hesitate to give us a call or send us an email with any questions or concerns.