Before planning your finances for the next year, it’s important to do a compilation and review of your past year to gain an accurate picture of the full-breadth of your financial situation. Annual reviews can be done any time of year, but with 2023 drawing to a close, it’s the perfect time to go over your financial wrap-up so you can step into the new year equipped with a plan for success.

In our previous blog from 2020, Year End Tax Planning, we touched on some financial planning strategies in order to reduce your taxes. We’ll give you a refresher on those points here, as well as delve deeper into some financial planning factors to think about going into 2024.

Recap The Accomplishments Of The Year

When you do your year-end review process, you can assess how well you stuck to your financial plans and goals. Investment companies can recap their biggest stories while individuals can see if they hit savings goals. 

With finances, it’s easy to focus on all you have yet to accomplish. Taking a moment in your review to recognize the goals you hit with your business, your retirement accounts, or whatever else can give you more motivation and drive in the upcoming year. 

How’s Your Financial Health?

Everyone loves a good success story, but everyone also always has room for improvement – especially when it comes to finances. If this past year wasn’t your best or you or your business are still getting your feet under you, year-end reviews show you where you stand and what you have yet to accomplish so that you can plan for the upcoming year. If this past year hit your goals out of the water, reviews and financial planning help you keep that momentum going. 

Year-end reviews are important because your financial situation can change without you realizing. For instance, your asset allocation could be imbalanced due to different assets growing at different rates. Your portfolio may not be as diversified as you think, as can occur when asset values change. New tax rules and regulations can also affect your portfolio. 

You may also experience changes in your income, needs, or personal situation, necessitating changes in your financial strategies. 

Set Goals For The Future

Financial planning is an ongoing, comprehensive process to manage all areas of your financial life. Whether you foresee a big life change in the upcoming year, like a marriage or a business merger, or you predict smooth sailing, it’s important to set goals so you can strategize appropriately.

Some financial goals can look like:

• Paying down debt.
• Planning for tax deductions and credits.
• Increasing cash flow.
• Increasing profit margins.
• And many, many more.

Your financial advisor will be able to help you identify goals and realistic measures to take to achieve them.

Prepare For Tax Season

Rather than waiting until tax due dates are looming overhead to know the true amount owed, either by you or the IRS to you for your return, it’s best to be proactive. This is especially true if your income varies significantly from year to year. Obtaining a compilation and review of your situation in December helps you figure out what to expect come tax season. 

While year-end reviews and financial planning don’t eliminate the stress of taxes, they do alleviate some of it by providing you with an accurate picture of what’s to come so that you’re prepared, rather than biting your nails in anxious anticipation.

The end of a calendar year is a good time for tax planning as this is the deadline for taking advantage of any last-minute tax saving strategies, such as making a charitable donation or maxing out retirement account contributions.

Conduct Your Annual Review With Golub, Senitt, Rosenberg & Co.

By compiling your financial information, reviewing your financial goals, and utilizing tax planning and financial planning strategies, you can set yourself up for success in the upcoming year. Good financial health requires constant maintenance in order to both achieve and maintain. By working with us for an annual review and your accounting needs, you can stay on track and make informed decisions.

Whether you choose to do your annual review at the end of the calendar year or at another point, it’s important to do so in order to gain a long-term view of your financial situation and strategies. 

Here at Golub, Senitt, Rosenberg & Co., we take pride in not just providing our clients with accurate, high-quality accounting services, but also with building long-term relationships with them. We hope not just to be a CPA firm you hire to meet your needs, but to be able to advise you in your business.

Whether you need to schedule an annual review or you require accounting services either as an individual or a business, we look forward to the opportunity to serve you. Contact us today to learn more about our accounting services here in sunny Los Angeles.

‘Tis the season for tax deductible donations. While many people donate out of the goodness of their hearts and not because they expect anything in return, there’s nothing wrong with knowing and taking advantage of the tax deductions involved in charitable giving. 

Whether you’re an individual or run a business, it’s important to know that not all deductions are treated equally. Working with a qualified CPA will ensure that you know how to properly handle charitable donations, as the rules can be quite complex. 

Charitable Donations: The Why, What, And When

Charitable giving helps those in need or supports worthy causes. It can greatly help the lives of those in need, as well as carrying out your core values. Doing so not only makes you feel good, improves your reputation, and builds connections, but can also lower your taxable income. These donations are gifts, money, or goods given to a tax-exempt organization that can reduce your taxable income. 

The end of the year, December 31st, is the cut off date in order to be able to claim the deduction when filing your tax return, which is why charities and consumers alike make a push for more charitable giving at this time.

Charitable Donations For Business Owners

Typically, C corporations are the only business structure that can take deductions when donating to charity. If you have an S corporation, an LLC, or another pass-through business, you would need a Schedule A, so ultimately, it would not matter whether the donation comes from you or your business. 

Services donated are not deductible, however expenses incurred through providing those services are. Certain types of donations are not deductible, such as political donations and donations to non-qualified organizations. Obtaining the professional help of a CPA helps you navigate all the complications involved in charitable donations so that you can take the deduction.

When Are Charitable Contributions Tax Deductible?

It’s important to note that just because you donate doesn’t mean your donation is tax deductible. Many givers don’t realize that donating to crowdfunding platforms doesn’t always result in a tax break. Gifts to friends and family or a stranger on the Internet are not tax-deductible. Transferring a property while receiving nothing or less than the full value in return may result in gift tax. 

You must donate to a qualifying tax-exempt organization as defined in section 501(c)(3) of the Internal Revenue Code and receive nothing in return for your contribution. Before donating, ask how much of your donation will be tax-deductible. Depending on the type of contribution and the organization, the amount you can deduct ranges. 

This limit applies to all donations made throughout the year. Contributions that exceed the limit may be able to be deducted on tax returns in following years through the carryover process.

Claiming Charitable Contribution Deductions On Your Tax Return

In order to claim tax-deductible donations, you must itemize your taxes. This means filling out a Schedule A along with the rest of your return. You may need to fill out additional forms, depending on the types of donations you made. Working with a CPA will help you ensure that everything is filled out correctly and accurately.

You’ll want to ensure that you:

• Donated to qualifying organizations.
• Documented your charitable contributions. Documentation needed varies depending on the type and amount. For example, the IRS requires a written letter of acknowledgement from the charity for donations worth more than $250.
• Kept the deadline in mind. If you date a check for before December 31st, but you don’t mail the check until after the new year, you wouldn’t be able to claim this, as the IRS determines delivery date for checks as the day it was mailed.

Maximizing Your Tax Deductions For Charitable Donations

Golub, Senitt, Rosenberg & Co. is here to help you with all of your accounting needs. We partner with you rather than just providing you with a service. We focus on timeliness, responsiveness, and building long-term relationships with our clients. This enables us to fully comprehend our clients’ needs so that we can provide you with the precise service you require.

For professional, timely, accurate work, contact our office today and let us show you the difference having capable CPAs on your side can make in your finances.

Check back for our monthly posts on taxes, we’re Glendale tax accountants helping some of the best companies in Glendale.

One of the most dreaded words for the average person is to hear “taxes”. The connotation is money that needs to be paid no matter what and a sneaking concern that there will be an amount owed. You will find taxpayers who would rather get large refunds then deal with the possibility of owing taxes at the time of filing even though this is not a good money management strategy. This post will try to help bring a rationale approach to getting ready for tax filing time and planning so there won’t be surprises.

The first item that needs to be defined is what type of income are you going to need to report. There are three different categories that you will typically fall into: Employee, self-employed and passive income which is dividend, interest, and rental income as examples. Passive income from an income tax point of view is more limited then the list above but conceptually understanding this group as passive is the easiest way of think about it as you are not actively involved in the earning of that income as you would with a normal job.

If you are employed, you have a concrete understanding of how much you will make and can make choices of how much your withholdings will be. If you are going to have a substantial change in that amount, then you may need to take out more withholdings to reflect the higher income. The lower your withholding, the higher the amount that will be withheld. The W-4 which you fill out when you start is a general guideline of withholdings, don’t let it fool you into thinking that it will take into account all of your circumstances.

Things get more complicated when there are other income and deductions available. All taxpayers have the option to take a standard deduction or to itemize based on having certain expenses that are tax deductible. Itemizing usually hinges on owning a principal residence with a mortgage but can occur if you have large medical or charitable deductions. Itemizing should be pretty standard with most expenses that you can take as a deduction being known year in year out.

Challenges come into play when you have investment portfolios as interest, dividends, and capital gains can swing wildly. One tip is to have an understanding of when brokers are selling stocks and getting an understanding of gains. I see taxpayers not being aware of the tax implications of stock sales and how much of a hit they will take on capital gains. With proper planning you can rid yourself of stocks that are doing poorly in years where you have gains to net them and reduce your taxable gains.

Self-employed people usually have challenges with tax planning since the income usually swings more often than salaried. This is where tax planning comes in and takes a much larger place in the equation of understanding how much tax will be due. This circumstance is best dealt with by doing an accounting of earnings in December and figuring out what income will be to make certain that payments are made by year end. Self employed individual make their payments quarterly as estimated payments and the last payment is due January 15^th of the subsequent year so this allows for time to figure out if there are additional amounts owed and be able to make payment timely.

Similarly, if you have investments in other businesses it becomes imperative to get estimates of how much you will be getting from those businesses. Unfortunately, this sometimes becomes difficult as some businesses are better run then others and can give you decent forecasts and some can not.  This results in many people with very complicated tax returns paying 100-110% of last year tax (depending on income) to cover current year and wait to receive all of their various third party activity later and deal with the potential liability at that time as paying that amount will at least eliminate penalties and interest.

In summary understand all your income and deductions and make sure you are taking out the proper withholdings or making estimated payments. If your income veers wildly year in year out, then a December accounting of what your situation is absolutely necessary so you can figure out true amount owed for that year. Be proactive and you will find that taxes may be unpleasant but not a word to be feared.

We’re standing by to help you with all your accounting needs, feel free to contact us anytime!