Is your annual April surprise somewhat akin to playing roulette? That is, how often have you known up front what will happen when all income and expenses are all added up? How often has the final number elicited a sigh of relief or a groan of pain, because you simply did not see it coming?
Way too often, if you're like the average taxpayer. The smartest business owners know to plan their taxes on a quarterly basis. The almost-smartest? Not as often, usually because there is bound to be something more fun to do with that time - but not more profitable.
I model my taxes quarterly. I take all my known income and expense data and extrapolate it for the full year. If you have a predictable salary that may be easy to do, but in any event it will be based on what you know at the time. Even if all you do is multiply everything by four (after the first quarter; by two after the second quarter), you'll get a reasonably sound projection.
After the third quarter projection, you'll be pretty sure what's coming.
If you know in advance that you will fall short and owe money, what can you do? You can
start setting money aside immediately to get prepared.
have more money deducted for your pay check.
make larger tax deposits.
There are plenty of ways to mitigate the pain, but it starts with knowing where it hurts.
All well and good you might say, but what do I know about tax modeling? Again, like most taxpayers, probably not that much. You rely upon a website or a service or a tax preparer to do it for you once each spring. You sure don't want to pay for that every three months. What can you do?
You can sign up for the new Count On It Tax Modeler. Still in the works applying the December tax reform changes, but almost complete, this tax model allows for simple fill-in-the-blank data entry. Your data is stored so that each time you visit you merely have to enhance the data you set up at the beginning, not start all over again.
It's free, so what have you got to lose? Nothing but the stress of not knowing where you stand.
Sign up here for the free Count On It Tax Modeler.