It has been awhile since my last entry. Seems like lots of things have happened since then. We are in the middle of tax season here at Edwards & Associates, PC so I will try to give some advice that will help you avoid IRS penalties and, perhaps even lower your tax liabililty.
Reminder: the estimated tax payment for the 1st Quarter of 2009 must be postmarked by Wednesday, April 15th. If you need a coupon or some help in determining how much to send to the IRS, get in touch with our office immediately. Remember, we need some time to calculate these amounts for you, if you need our help, so give us some time to make an accurate estimate for you.
Also, if you want to fund your IRA account for 2008, the deadline is April 15th.
And, of course, if you owe a balance on your 2008 taxes, the deadline to make that payment is also April 15th. Filing an extension does not give the taxpayer more time to PAY the tax, only more TIME to file an accurate tax return. If you don’t know yet, whether you will owe or not, we can help you calculate the amount to send with your extension to avoid penalties. Get in touch with our office and let us help you. It frustrates me each year to see how much in penalties our clients pay to the IRS. It is often times more than you pay us to prepare your tax returns!
Since my last blog, the stock market has completed its best month in over 7 years. Does this mean the market has turned around? I wish I knew. But what I do know is that if you don’t fund your retirement plan out of fear of further market declines, then you will lose some of your money with no chance of a recovery. That is because of paying higher taxes without funding your retirement plan. For instance, lets say you are in the 33% tax bracket and elect not to fund retirement this year. Then you will lose 33% of what you would have funded, to taxes. Therefore, if you go ahead and fund the retirement plan, and the market suffers further declines, but less than 33%, then you are still better off. And the market just might recover at some point during the next few years. So, I am still a big proponent of funding for retirement, every year. We can help you to invest those dollars into something with more stability than the stock market, if you so desire. A retirement plan can invest in CD’s and money market accounts, as well as the stock market. Get in touch with us to help you decide which investments are right for you.
Our newly elected President has certainly been busy since my last posting in mid-February. I am not going to try to cover all of the changes that he is proposing in this space, at least not today. But he is in the middle of budget negotiations with Congress and has proposed his healthcare reform. The insurance companies have already reacted to some of his proposals and this may help lower health insurance costs for all of us. We will continue to monitor this and his other proposed changes as they develop.
That is about all there is time for now. Back to reviewing tax returns. Get in touch with our office if there is any way we can help you.