Are You Planning Yet?
The impact of new tax laws
Now that we are through the 2002 income tax season, it is time to reflect on the result of our tax filing for 2001. There were a number of changes that affected filing for 2001 and it will now be different when next year comes around.
It would be wise for all wage earners to analyze their W-4’s for withholding in 2002. With the addition of the new 10% income tax rate, if all income and expense remained the same for 2002 there will probably be a difference in the amount of refund you received for 2001. Check with your employer to update your W-4.
Business owners and investors may want to look very closely at estimated tax payments to determine the changes for this year and how they will affect amounts due. A number of tax law changes are taking effect in 2002 and will affect years to come. Make sure there are no surprises when you prepare your taxes next year.
Also, for business owners filing returns other than the standard 1040, IRS has reduced the paperwork burden for small businesses. Although these changes may not effect you until you file your return next year, it would be wise to check on reporting requirements for tax deposits, payroll calculations and depositing requirements and retirement plans.
For individuals that invest in a retirement plan each year, you need to review the new $3000 contribution limit as well as the “Catch-up” provision for those over 50 years of age. You need to plan this now as it may be too late by April 15, 2003 for you to set aside the full amount. Also, these contribution limits change periodically over the ten- year period the new tax law is in effect, so plan now.
Planning for the new tax laws will require you to plan sooner, more often and for you to seek the advice of either a professional tax advisor or investment advisor. Start now to plan for your future.
Terry W. Stevens is a Member: National Associate of Tax Professionals and works out of Clark Fork, Idaho.
--As of April 5, 2002, 79.7 million individual tax returns had been filed. By that same date, the IRS had refunded, via direct deposit, over $77 billion dollars. Did you get yours?--