With a little over one month before that annual event in which all we Americans must participate. Tax Time! Do you know where you stand when it comes to what you owe Uncle Sam?
Have you found yourself one of those who didn’t adjust their finances based on last year’s change in tax law and will now owe hundreds if not thousands of dollars? Or, did you prepare and make the necessary adjustments so that your liability was minimalized?
Heads You Win. Tails You Lose.
You may have heard the stories in the news of people who are used to receiving a refund check each year, facing the shock of owing the government. They didn’t realize that the change in withholding effected the amount of tax they were paying against their income or that real estate taxes and other mortgage expenses were capped, where they used to be unlimited.
A Forbes article in August of last year, wrote, “…the General Accounting Office (GAO) is warning that, unless taxpayers act to adjust their withholding, more than thirty million taxpayers will owe taxes next year, an increase from last year. The GAO conducted a “performance audit” from February 2018 to July 2018. They found that taxpayers are likely not withholding the proper amounts from their paychecks.”
We were warned.
If you’re in the group who will unexpectedly owe money, we hope you’ve consulted a professional who may be able to help you find ways you can reduce your tax burden. If the amount is correct, know that you can take steps now to ensure it won’t happen when you file next year. Consulting your tax or accounting professional to manage your taxes is one of the 20 tips you can read about in the Cashflow GPS Quick Start Guide.
It’s unfortunate but this is a classic example of not understanding and managing cash flow. The balance sheet of your personal and business life-and the budgets you set for both – need to be constantly evaluated and adjusted to account for changes in everything, from the costs of goods and services to your income.
Whether you earn a paycheck from your employer or pay yourself as a business owner, the change in tax law affected everyone. Income and corporate tax levels changed; some say to the benefit of all of us, as citizens or payors, others only to corporations and the very rich. While the truth lies somewhere in the middle, everyone knew that changes were being made and those who did analyze their finances and made the necessary adjustments will face minimal impact or, in some cases, see a decrease in the amount they pay or an increase in the amount they receive after April 15.
Time For A Cash Flow Check
Taking the time to review your cash flow on a regular basis and understanding the numbers will give you a real-time view of where you stand and allow you to project what hills and valleys may lie ahead. We hope if you do owe, it won’t be too big a hit. If you are getting money back, remember: you loaned the government that money at no charge; you could have invested instead and earned more money for yourself. Think about that when you decide how much to set aside for your dear Uncle.