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When it comes to taxes, often times the 4th quarter of the year can be make or break time for taxpayers. All too often we connect with taxpayers at tax time and learn details that will have a significant impact on their tax position. Learning these details after the end of the year means there is not much we can do to help improve a client’s tax position. However, learning the same details before the end of the year could allow client’s the opportunity to save big at tax time.

Fact: Don’t wait until tax time to think about taxes; take action before the end of the year.

Often clients experience major life changes during the year, but do not consider how those changes will affect them from a tax standpoint.  Then, when the they learn the impact the change will have on their taxes, it’s too late to prepare for that change.  Our hope is that you will do your own 4th quarter self assessment to ensure you’re informed about life changes that may impact your tax position.

We’ve listed below a sample of major life changes that you need to consider for tax purposes:

  • Change in marital status
  • Change in dependents
  • Dependent turned 16 during the tax year
  • Dependent starting or finishing college during the tax year
  • Moving more than 50 miles
  • Bankruptcy
  • Purchasing a home
  • Selling a home
  • Property losses due to accidents
  • Property losses due to natural disaster
  • Starting a business
  • Selling/closing a business

Beyond life changes, there are other changes in your finances that could also have significant tax implications.  Often times, the financial matters that may be deemed as a negative, can be turned into a positive for tax purposes.  For example, if you have unrealized investment losses, it may be practical to recognize those losses within the current tax year in order to offset other taxable gains.

There is a long list of changes that you need to consider before the end of the tax year.  Contact us if you want to evaluate the tax impact of changes in your life this year to avoid surprises at tax time.

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