One of my favorite times of year at Moore Colson is the fall planning season. We use this time to meet with our clients, evaluate opportunities, and make decisions that will have a significant financial impact the following year. If year-end planning is not something you are currently doing – or if you think you might not be doing enough – here are the top 5 reasons I recommend this process:

Reason #1: Cash flow planning

Proper year-end planning should provide clarity regarding the cash needs for 4th quarter estimated payments and the amounts due with your tax returns in April. We typically recommend that individuals utilize the prior year safe harbor method when determining their quarterly estimated payments. However, if your income is significantly higher than the prior year, this could result in a large tax bill come April. As we all know, more income does not always mean more cash in the bank.

Reason #2: Equipment purchase considerations

Company owners often ask if they should buy equipment before year-end, and we give our standard response, “it depends.” We never recommend buying equipment solely for the tax deduction, but if a Company is considering purchasing new trucks or other equipment early in the following year (and cash flow allows), it might make sense to purchase the assets before year-end. This is also a good time to review the current and future year depreciation rules to make sure you are taking advantage of the most favorable tax treatment.

Reason #3: Individual tax reduction

Determining your individual tax liability also allows us to suggest tax reduction strategies while there is still time to take action. For example, we often recommend our clients maximize their pre-tax retirement contributions through their 401(k). We also recommend a review of your itemized deductions to determine if there is a benefit to making additional charitable contributions, paying your January mortgage payment by 12/31, or maximizing your health savings account contributions for individuals with a high-deductible health plan.

Reason #4: Adjust your withholding (if needed)

No one likes penalties, especially when they can easily be avoided. As we approach year-end, we recommend reviewing your year-to-date withholding and estimated payments to make sure you have met the estimated tax payment requirements for the year. If you missed a quarterly estimated payment or your salary increased and you didn’t increase your withholding, this gives us time to increase your year-end withholding to avoid unwanted underpayment penalties.

Reason #5: Avoid surprises

The last thing anyone wants to receive on April 15th is a surprise tax bill. Year-end planning allows for a review of your year-to-date financial activity and a discussion of any new or unusual income or deductions. This can be as simple as determining any additional credits for a new child, or as complex as reviewing your Company’s financial statements and projecting your pass-through income.

Bottom line

Following the above recommendations will provide clarity and avoid surprises on April 15th. There could be additional items for consideration as each individual and business are different, and that’s why partnering with your CPA in the fall is an investment that certainly pays off in the spring.


Adam Bateman is a Director in Moore Colson’s Tax Practice. He serves as an advisor to clients in many areas including representation before the IRS and state tax authorities, mergers and acquisitions, and implementation of successful tax strategies for closely-held businesses in the construction, transportation, private equity, manufacturing, retail, and financial services industries.



AJC TWP 2022 Award Ribbon
AJC TWP 2022 Award Ribbon

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