One Month to Tax Day – 4 Questions

Many of the missteps people make related to taxes are errors of omission — simple oversights that lead to higher tax bills than necessary, or even penalties and interest. As we head into the last thirty days of the tax season, here are four reminder questions to ask yourself before April 15th:

1. Did you close any accounts in 2017?

Estate planning, retitling accounts and combining duplicate accounts make for good financial tidiness. That often means closing accounts during the year. Sometimes custodians (Fidelity, Schwab, etc.) don’t post account statements or 1099s for accounts that were closed during the year. Double check that your tax forms (1099s) represent all of your accounts, including those no longer in use.

2. Did you contribute to a ‘Roth for Minor’ account for your kids or grandkids?

Roth investments grow tax-free, even when you withdraw the funds. A single $5,000 Roth contribution today will compound to $150,000 in 40 years at 8.5% (the annual return for the S&P over the last 10 years). Contribute multiple years in a row and your kids/grandkids will have a significant head start on retirement. Roth for Minor accounts are relatively new. Double check with your CPA to get their sign off on this strategy.

3. Did you chase down all of your charitable contributions for 2017?

It’s easy to forget a contribution you made many months ago. Run through your list of charitable organizations and keyword search your email history for mentions of ‘contributions’, ‘charity’, ‘charitable’ and ‘donation receipt’ to ensure you get them all.

4. Did you move to the 1099 world?

If you’ve left your W-2 job, sold your business or started a career as a contractor, remember to add 2018 quarterly estimated tax payment dates to your calendar. These deadlines can sneak up on you. The due dates for 2018 estimated quarterly tax payments are:

• April 16, 2018 for Q1
• June 15, 2018 for Q2
• September 17, 2018 for Q3
• January 15, 2019 for Q4

Tax season can feel like a burden so in honor of Stephan Hawking’s passing yesterday, “Remember to look up at the stars and not down at your feet.”

Adviser is not licensed to provide and does not provide legal or accounting advice to clients.  Advice of qualified counsel or accountant should be sought to address any specific situation requiring assistance from such licensed individuals.