The Art of Business: Clip-‘n-Save Calendar for Year-Round Tax Savings
Tax planning is like flossing your teeth, you know it’s good for you, but you don’t always do it. You might think differently if you figured out how much you end up saving by planning through the year, according to Larry Montague, a partner in the Private Client Advisors practice of Deloitte, one of the nation’s leading professional services firms.
“Many individuals are only interested in their taxes and financial plans at year-end, and in January,” says Montague, “But, there are 10 more months in the year, and there’s plenty individuals and sole proprietors can and should be doing to make sure their financial house is in order.”
Deloitte has developed a tax and financial planning calendar to help individuals recognize and act on the various milestones, starting with tax- savings tips and financial planning strategies individuals should be focusing on now during the first quarter of the year. These recommendations, and additional tax and financial planning advice covering the other nine months of the year, are outlined below
If you’re really interested in doing it right, plug these dates into your Palm Pilot or Blackberry. Come this time next year, you’ll be happy you did.
First Quarter
General:
- Complete Form W-4 and adjust withholding if needed.
- Apply for a Social Security number for any child who does not have one.
- Consider filing tax returns early in those states or jurisdictions where discounts are provided (e.g., Florida).
- Determine whether it is advantageous to pay any taxes with credit cards.
January 15:
- Pay fourth-quarter estimated taxes for the preceding tax year.
- Make quarterly defined benefit Keogh contribution for preceding year.
January 31
- Give domestic employees their copies of Form W-2, Wage and Tax Statement.
March 15
- If you are a U.S. owner of a foreign trust, ensure the trustee files Form 3520-A, Annual Information Return of Foreign Trust with a U.S. Owner, or applies for an extension to file on Form 2758. If the trustee fails to file, the U.S. owner may be subject to penalties.
Second Quarter
April 1
- Comply with minimum distributions rules for qualified plans by April 1 if you attained age 70-1/2 in the previous year.
April 15
- File individual and gift tax returns (or an application for an extension).
- File Schedule H (Form 1040) with your tax return if you paid cash wages of $1,400 or more in 2003 to a household employee.
- Report federal unemployment tax (FUTA) on Schedule H if you paid total cash wages of $1,000 or more in any calendar quarter of 2003 to household employees.
- Make first-quarter estimated tax payment.
- Make prior-year IRA and Coverdell Education Savings Account contributions.
- Make prior-year Keogh or SEP plan contributions. If you applied for an extension to file your tax return, these contributions are not due until you timely file your tax return.
- Make quarterly defined benefit Keogh contribution for the current year.
- If you have transacted with a foreign trust (e.g., owner, transfer to or distribution from a foreign trust, hold a qualified obligation of a foreign trust, or receipt of certain gifts or bequests from a foreign person), file Form 3520.
June 15
- Pay second-quarter estimated taxes.
- If you filed for an extension to file Form 3520-A (originally due on March 15), file the form.
June 30
- File Form TD F 90-22.1, if necessary. Generally, each U.S. person
who has a financial interest in or signature authority, or other authority over any financial accounts, including bank, securities, or other types of financial accounts in a foreign country must report that relationship on Form TD 90-22.1. The requirement is only necessary where the aggregate value of the financial accounts exceeds $10,000 at any time during the calendar year.
Third Quarter
July 15
- Make quarterly defined benefit Keogh contribution for the current year.
July 31
- File Form 5500, Annual Report of Employee Benefit Plan, if applicable.
August 15:
- If you extended your individual tax return, file the return or file for another extension.
- File Form 3520, if your individual tax return was extended, and
filing of the form is necessary.
September 15:
- Pay third-quarter estimated taxes.
Fourth Quarter
General:
- Begin your year-end tax planning:
- Project your current year and next year tax liabilities.
- Evaluate the applicability of the AMT and other taxes.
- Adjust withholding, if necessary.
- Evaluate year-end capital transactions.
- Establish a separate Keogh for self-employment income.
- Comply with minimum distribution rules for qualified plans.
- Evaluate before-tax and voluntary after-tax contributions to retirement plans.
October 15:
- File individual and gift tax returns extended at August 15.
- File Form 3520 (if necessary) if your individual income tax return was extended at August 15.
- Make quarterly defined benefit Keogh contributions for the current year.
- Recharacterize a Roth IRA conversion or change a prior year contribution from one type of IRA to another (if your individual returns were extended at August 15).
Throughout the Year
- Re-evaluate your long-term strategies.
- Evaluate your tax and financial strategy for receiving discretionary and mandatory retirement plan distributions.
- Evaluate investments on an after-tax basis.
- Rebalance your investment portfolio and re-evaluate your uses of debt.
- Consider income shifting to maximize family wealth by making gifts up to the annual exclusion amount or up to your lifetime exclusion amount.
- Evaluate passive loss exposure and potential investment shifts.
- If you have excess cash flow, consider how to invest those funds.
- Optimize mix of interest expense items.
- Consider making charitable contributions of property.
- Consider ways to fund your child’s education.
- Evaluate your mix of portfolio and passive income.
- Review prior gifts to children under age 14 and their incomes to minimize the amount of income that will be taxed at your top marginal rate.
- Review the selection of your second residence and status of your vacation home.
- Be mindful of expiring credits, tax reductions, and exemptions.
- Review resident and non-resident filing requirements for federal and state income, estate, gift, and generation-skipping tax purposes.
Year-End Financial Planning Guide 2003, the annual book published by Deloitte, provides a quarterly planning calendar that puts the tax year in perspective and helps set a framework for building an individualized planning calendar. Year-End Financial Planning Guide 2003 is free and available on the firm’s Web site at https://www.deloitte.com/us/yearendguide.
This article was last modified on December 14, 2022
This article was first published on April 5, 2004
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