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It’s Time for Midyear Tax Planning

It probably feels as though you just filed your taxes — and here I am writing an article on mid-year tax planning. The truth is, while many people are understandably tuned into taxes in March and April, when filing season is in full swing, tax planning is most effective as a year-round endeavor.

Of course, that’s in part because taking a proactive approach to tax planning can help minimize your tax burden when filing season inevitably arrives. But the peace of mind that can come from taking charge of your finances (and your taxes), so that you can focus on living your best life, is valuable as well.

So, with that in mind, here are a few mid-year tax planning strategies and tips:

Mid-year Tax Planning: First, Know Your Financial Goals

 On its face, tax planning involves looking at your various sources of income and considering the ins and outs of different tax deductions, credits, and tax exemptions. To be most effective, at least at the start, tax planning should be about you and your personal and financial goals. Try to begin your mid-year tax planning process with a strong sense of where you are financially and where you want to be.

This might mean revisiting an existing list of short-term, mid-term, and long-term wants and needs to see what you have accomplished during the first part of 2023.

Also, make note of which goals need more attention and why.

On the other hand, if you haven’t had a chance to write down goals for this year, mid-year is a great time to do that.

For example, maybe you want to continue feeling comfortable in retirement, so your emergency savings will need a boost. Or perhaps you want to travel more, so you’ll need sufficient cash to spend at a favorite destination.

Writing your goals down and assessing them through a mid-year lens can help clarify them.

In turn, the clarity that you gain from revisiting personal and financial goals can help your tax adviser (if you have one) know how best to help you.

Tax Planning Strategy: Meet and Discuss With a Trusted Advisor

Another helpful step for mid-year tax planning is meeting with a trusted tax or financial advisor and discussing your goals. This is a good time to get answers.

For example, you might want to get your advisor’s take on where you are now relative to this time last year in terms of your potential tax liability.

Also, be sure to compare where you expected or wanted to be at this point in 2023.

Maybe your goals have changed significantly since you last met with your advisor. Life can move fast, and our perspectives on what’s important in our lives can shift quickly (or subtly) as well. A mid-year tax planning meeting is a good time to make your advisor aware of any life shifts or changes in your financial situation, personal circumstances or perspective. (Those might impact your taxes).

Also, common circumstances like selling your home (or wanting to), buying a car, or starting or ending a business, job, or marriage can have significant tax consequences. Be prepared to share that kind of information with your tax advisor so that you have a complete picture of your potential tax liability for the year.

Mid-year Tax Planning Bottom Line: Get and Stay Organized

Mid-year is a great time to think about what went wrong during the most recent tax filing season and to vow to do better next year. For example, if you weren’t happy with your preparer last tax season or are ready to make a change for other reasons, take time now to look for a qualified tax professional.  Or, if you have been doing your own taxes, perhaps you want to investigate different filing options or find a trusted source of advice to guide you next time.

Additionally, mid-year is a great time to read up on changes and key amounts that could affect your tax liability for 2023.

Most of all, use mid-year to get (and stay) organized.

When potential tax-related paperwork or information flows in, keep it in one place.

Consider scanning important documents or, in some cases, shredding what you don’t need. (It’s generally a good idea to keep tax records for at least three years from when you filed your tax return. But if securities losses or bad debt are involved, you might need to hold onto those records for up to seven years.)

Above all, create a system that works for you to track income, expenses, donations, and the like.

Doing the above things and engaging in the goal-setting and strategizing aspects of mid-year tax planning should help free up time to do what you love most — which, for many people, probably isn’t taxes.

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Delta Jones-Walker

Connect with Delta Jones-Walker and Atled Financial on Facebook, Twitter: @Atled_Financial and LinkedIn! To schedule a free consultation or a presentation to your group or organization, call 219-513-3710 or email [email protected] and mention this column. Topic ideas for this column are welcome!

Securities and investment advisory services offered through Woodbury Financial Services, Inc. (WFS) member FINRA/SIPC. WFS is separately owned and other entities and/or marketing names, products or services referenced here are independent of WFS. Insurance services offered through Atled Financial Group 3801 Ridge Road. Highland, IN. 46322.

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