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With more than halfway through the year, many taxpayers are looking to reassess their financial progress. Liz Miller, CFP and founder of Summit Place Financial Advisors, joined TheStreet to offer insights on how to ensure you’re on track for a smooth tax season this April.
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Full text of the video below:
Conway Gittins: Let’s talk about taxpayers more broadly in terms of the mid-year financial update, what should all taxpayers be looking at as we enter the middle of the year?
Liz Miller: There are some big things that we always want to talk about. Let’s just start with your income. You want to get your most recent W-2 and you want to look at what you’ve been withholding so far this year and you want to compare it to last year. You want to say, okay, well, what were my taxes last year at this point. And am I way ahead, if you work with an accountant, send them a W-2, because what we’re trying to figure out is, am I withholding enough? This is the time of year to make an adjustment to say, oh, I don’t think I’m keeping enough from my paycheck and I don’t want to have a big paycheck to give to Uncle Sam next April. So first, look at your earnings on your W-2. So far this year compared to last year and how much tax has been withheld in your state and federally so far this year.
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If you feel like you need to deduct more taxes, call your HR people, your benefits people, whoever is helping you make these changes and ask them how do I deduct more taxes from my paycheck. So number one is your income. And then with that, maybe you have to pay estimated taxes and you realize that you’re going to have to pay more, and you’re probably working with an accountant who might have told you what your estimated taxes are. Send them your W-2 and say, hey, here’s how much we paid. So far in April and June. Am I on track. Should I pay a little bit more in September and next January to make sure that I’m paying enough in my tax planning.
Finally, we’re going to move on to our investment portfolio. And you need to look at my gains so far this year. If you have individual stocks and you’ve been trading, if you’re working with an advisor, ask for an update on your capital gains so far this year. If you’re doing it yourself, most websites will show you what’s called your realized gains for the year. What are your realized gains and losses. So far this year. So again, you can see, do I have to pay taxes. So realized gains and losses depending on your income, you’re going to pay anywhere from 15% on that to up to 25% on top of that depending on your income level.
