Tax season is stressful for everyone. If you own your own business or work as a contractor, then this time can be even more stressful because you are unsure of what you might owe at the end of the year. Some of this stress can be avoided if you work on saving for year-end taxes with a few tips from a tax debt lawyer with our friends at Wright Law Offices:
Tip #1: Make Quarterly Payments
Hire a tax professional, and they will create estimated quarterly payments. These are made once per quarter throughout the year around March, June, September, and December to both the state and federal government. These months vary based on your company’s payment schedule, but the payments are usually made around these times. This amount of money is estimated based on what your business made the previous year. By paying these amounts throughout the year, you will cut down on what you owe in taxes at the end of the year.
Tip #2: Budget
Don’t wait until the end of the year when it is time to do taxes to start saving money. Set aside money each year in preparation for what you may owe. While estimated quarterly payments can help, if you made more this year than the previous year, you will owe more in taxes. Your business should always set aside money anyways in case of emergency, but it’s best practice to create a savings fund just for taxes.
Tip #3: Payment Plans
Did you know that if you are unable to pay your taxes, you can actually create a payment plan with the government? There are several rules around this, so you will need to check with a verified accountant as to whether your specific case is eligible for a payment plan. However, it is always nice to know that in case of emergency, you can make payments on a regular schedule. Keep in mind you cannot create a payment plan every year, nor should you rely on one. This is in case of emergency only.
Tip #4: Make Donations
Charitable donations are tax write offs, meaning that they detract from the overall amount you may owe. It is a good idea to include charitable donations in your budget for the year for tax purposes, but you also get the added benefit of feeling good, knowing that you helped an organization in need. Just make sure to research that you are giving to certified charities, otherwise the money given away does not count as a tax write off.
Tip #5: Claim Deductions
If you are working with a tax professional, they should know all the deductions which you qualify for. However, it never hurts to follow up with them. If you are a contractor who works from home, you can receive deductions for your home office. If you run a larger company, you can receive deductions on certain types of insurance that your company uses. Always talk to a professional to ensure you are receiving the maximum amount of benefits.
While these tips will hopefully help, sometimes the unexpected happens and you are unable to pay your taxes. Contact a tax lawyer near you for help immediately to ensure that your business and personal assets are protected.