Why Tax Planning?

Written By Lauren Stover

Who should do tax planning? Almost everyone. Why? So you can have a great idea of what to expect before you file your tax return. Ideally, this is done before the end of the tax year so that you can make necessary adjustments while there is still time. July 30 is going to be more helpful than December 30. Early December is better than never.

Tax planning isn’t going to suddenly make filing your tax return fun, but it should reduce stress and increase your understanding of your tax liability.

If one of these fits you, then tax planning is likely helpful:

  • if you usually receive a large refund

  • if you had a large amount due last year

  • your income has changed

  • you have had a life change: marriage, divorce, had a baby, moved states, changed jobs

  • you haven’t paid your quarterly estimated tax payments

  • started a new business

Large and small is subjective, but generally speaking, you shouldn’t owe more than $500 and you shouldn’t get a refund over $500.

If you don’t have a filing requirement, get a small refund or owe a small amount when filing each year, then tax planning is probably not necessary.

Lauren Stover