Tax Planning – Making Sure Uncle Sam gets his cut, and nothing more

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A few days ago, I asked my accountant to make sure I was on track for my tax withholding for the 2012 year.  To my surprise, i wasn’t 🙁
What I quickly discovered is that the better I do, the more I need to pay in (gotta love our system, penalized for working harder).  The short story is that you need to be inconstant communication with your accountant.  I made a big mistake in not communicating my changes to my accountant.

So, here’s what I recommend.  First off, if you are a contractor, make sure that any time your rate changes, notify your accountant.  My rate changed by $10/hr in Feb, and that threw off the calculations by quite a bit.  To make things worse, I was also helping some clients remotely.   All of this factors into a much higher tax payment.  I always recommend working with your accountant because he can keep up to date if your tax bracket changes.  For me, I hate have to come up with large sums of money in April, I try to pay my estimated taxes as I go.  Even if you pay the whole bill in April (not sure if that’s allowed or not) you still need to be accruing money to pay that bill later.

Just as a side note, remember that in the US, the more successful you are, the more you are expected to be pay in taxes, and not just as a straight percentage.  This is always a conflict in my heart.  I strive to be successful and keep increasing my income in order to clear off all my debt and provide for my family’s future.  However, I vehemently disagree with how the government chooses to spend my money, so my ultimate goal is to start checking out of the system.  I want to pay off my debt, and build my homestead to be self sufficient, so that I can start to minimize the amount of money I pay in for taxes.  If you haven’t read Atlas Shrugged, I highly encourage it.  (for those of you without the diligence to read a 1000 page book, there is also a movie version that gives the same info.  ha ha).  So, my rant is over…

Just remember, keep in close contact with your accountant.  You don’t want a major surprises in the middle of the year (or in March).

Still learning the hard way…

“Who is John Gault?”


As always, thanks for reading and don't forget to check out our SAP Service Management Products at my other company JaveLLin Solutions,

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