People generally like their big refund check at the end of the year. A prudent financial advisor might point out that a tax refund check is simply an interest-free loan made to the United States. Wouldn’t it be better to simply have larger paychecks throughout the year?

This is what is simply referred to as “W-4 planning,” as changing an employee’s exemptions with their employer may be enough to yield the desired results. However, once our clients have significantly more business income than W-2 income, withholding may not be enough.

When tax situations get more complex, it is important to make quarterly estimated tax payments. Our professionals will consider income, income type, changing deductions, and law changes in order to estimate a client’s income at the end of the year, which helps them make proper estimated tax payments.

Estimated taxes are paid because if a taxpayer does not pay evenly throughout the year, he or she may be subject to underpayment penalties and interest from both the IRS and the state tax authorities. Consistently over-withholding income from paychecks is no different from voluntarily paying more taxes, because it’s still cash that’s not in our client’s pocket today. We can help avoid this problem.

Call us at 651-689-4789 to learn how to learn how to keep your cash as much as possible.

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