Ask The Expert: Why Do I Owe So Much In Taxes?

Ask The Expert: Why Do I Owe So Much In Taxes?

The Alliance Tax and Accounting Service Team, based out of Elm Grove, a western suburb of Milwaukee, has been solving tax problems for individuals and businesses since 2009. With a dedicated staff of Certified Public Accountants, experienced tax resolution specialists, and case managers, we’re ready to solve your tax problem – permanently. Most of our tax clients come to us when their most pressing concerns become:

“I finally filed my 2016 taxes, but want to make sure 2017 is less of a headache. What can I do to prepare?

Arthur Lee, owner of Alliance Tax and Accounting Service has a response for those concerns:

It’s very common for individuals and business owners to put off taxes until they are due. For many, taxes and bookkeeping appear complicated and confusing, so they avoid it until the federal tax deadline. The biggest issue with this approach is the potential for tax problems to snowball. When caught early – especially before the end of the tax year – many issues can be turned around by your accountant or at the very least, you can make the right changes going forward.

At Alliance Tax, many of the clients that come through our door simply don’t know that there were things they could have done throughout the year to lessen the impact of their tax problems. Many of them are surprised to learn that spending a small amount of time each month on bookkeeping can lead to a headache-free tax appointment with us.

Each year, millions of Americans have far more taxes withheld from their pay than is required. Now is a good time to sit down and adjust your withholding so that the taxes withheld from your pay are closer to the taxes you’ll owe for this year. This is especially helpful if you receive a large refund but would prefer a larger paycheck throughout the year. If instead you owed tax when you filed for 2016, you may need to increase your federal income tax withheld from your wages.  

Now is also the perfect time to shop for a tax professional. You’ll have more time when you’re not up against a deadline or anxious to receive a tax refund. Our team at Alliance Tax is available to walk you through the best bookkeeping and tax practices so that you are on track. They can also assist you in planning for the rest of the year, taking into account things such has a child starting college or the start of a new business.  

Some of the best actions you can take are for the month of December. This is a great time to sit down with one of our certified accounts and assess the current year – starting with your retirement accounts. It’s a smart move to make additional contributions before the end of December. You’re limited annually on the amount that you can give, so you should utilize each year to contribute the maximum amount possible. Besides the obvious benefit of increasing your retirement savings, contributing to these accounts will reduce how much tax you’ll owe or could even ensure you get a refund.

If you’re saving for your children’s education in a 529 Plan, the end of the year is a great time to consider making additional contributions. Not only are contributions tax-free up to $14,000, they could also lead toward a state tax deduction or credit.  

Planning ahead a bit each month can offset future tax problems and make it easier for you to utilize deductions or tax credits. Many of the tax problems that our clients face begin with simply not having the proper resources or assistance of someone who understands the current tax laws. Whether you are an individual or a business owner, Alliance Tax is available to answer questions and offer advice with no judgment. GIve us a call today and we’ll get you started with a complimentary consultation: (262) 786-4442.