Caught off guard by a big tax bill?

Getting hit with an unexpected tax bill can feel frustrating, especially when you thought you were doing everything “right.”

Most surprise tax bills are usually the result of a few small gaps that went unnoticed throughout the year.

 Here’s are three steps to reduce the chances of this happening again next year.

Step 1: Review your tax return to identify the issue

 Before changing anything, you need clarity on why the bill showed up.

 You might find on your tax return:

• You weren’t withholding enough from paychecks, social security, or retirement distributions

• Using tax-inefficient investments in non-retirement (taxable) accounts

• Realizing significant capital gains without planning for the tax impact

Step 2: Make the adjustments for next year

Once you know the issue, the fix is often straightforward:

• Update your Retirement account withholding or pay quarterly estimated taxes

• Review your brokerage accounts for more tax-efficient investment strategies

• Consider what might be different about this tax year than the one prior

Small adjustments made early in the year are far less painful than scrambling at tax time and can avoid penalties as well.

Step 3: Know When to Get Help

If Steps 1 or 2 feel overwhelming—or you’re not confident you’re pulling the right levers—it may be time to bring in professional support.

We can help you identify the issue and plan ahead for the current and future tax years. 

We also can introduce you to a qualified tax professional to establish the proper withholding and make sure you’re taking the appropriate steps with your taxes going forward.

Investment Advice offered through FC Advisory LLC, a registered investment adviser doing business as “Financial Coach” and as “New Wealth Project”.  This content is provided for informational purposes only and is not intended as personalized investment advice.  Information provided is not and should not be interpreted as investment, tax, legal, or other professional advice or recommendation by FC Advisory, LLC or the members of our firm.  Always consult the appropriate professional regarding your specific situation before implementing any options presented or inferred.