3 Reasons to Schedule a Year-End Tax Planning Meeting With Your CPA

1. Your family is changing.

If you have added a child to your household this year, you can consider restructuring your long-term savings formulas to reflect a goal ofsaving foryour child's college expenses in addition to your future retirement. There are a variety of tax-related pros and cons of different college savings strategies out there, including retirement plans that allow you to make penalty-free withdrawals if you use funds for a family member’s higher education costs. 

While having a baby and raising children cancomewith some costs, parenthood does provide tax benefits, includingadditionalwithholding and credit options.1 

Marriage, divorce, job changes, and moves can also affect yourfamilyfinancial equilibrium, including tax and financial plans. Give your CPA a call if your family has undergone changes in the current year or is expected to see significant changes in the upcoming year. Way to plan ahead! 

2. Your profits have increased substantially.

If your business changes, you should also reach out to your accountant, especially if it includes a significant increase in profits. As your profits grow, you will need to explore new tax planning strategies as well as ways to reduce overall liability. Depending on your situation, your CPA may advise you aboutpossible modificationsthat can be made to the overall structure of your business.  

Another useful suggestion if your income increases dramatically is to begin to file taxes quarterly, rather than trying to scramble to assemblea big chunkof money in the spring.2

You can also put more tax-deferred contributions into your retirementaccount, orembrace other strategies to reduce your tax liability when you file your return. Your CPA may have other recommendations.

3. You haveexcessworking capital.

If you carry excess working capital into the new year, you will be taxed on those profits. Even if funds are just sitting in your business or personal bank account, you will still face corporate or personal income tax on those amounts. To avoid this, check in with your CPA before the end of the year for somepossible optionstooptimizethese funds in a way thatis able tohelp your business, increasedeductionsand reduce your tax liability. 

For instance, you can invest in new equipment orprepayoperating expenses. You can invest in your people and their well-being with salary increases or bonuses. You can even look for ways to expand, such asacquiringa related company or a competitor. Or simply accept the tax liability and be proud that you have a surplus available for future slower times.3 

Ultimately, thereason you should check in with your accountant at the end of the year is toidentifytax-saving strategies for the current year. If you wait until tax season and thecalendar tostart over,it'sgenerally toolate to do muchthat’ssubstantial (with the exception ofmaking a retirement contribution).