Tax guidance

[ds1013]

Just got the call from our tax preparer that we owe 16k to the federal and almost 3k to our state.  Yeikes. 

We had a significant pay increase for DH, a decent sized required distribution from an inhered IRA, and a good year in the stock market, so I knew we would owe, but I wasn't prepared for 19k.

In conversation last night with DH, I asked if there is a profession that would look at this year's taxes and tell us/suggest what we should do differently this year so we aren't in this situation again next year?  Our tax preparer is just that, no guidance and our investments people don't seem to do that either.  Are there people who do that? And if so, how do I find them?

[mainelyfoolish]

From what you said here, it sounds like the only strategy you need is to pay quarterly estimated taxes when you have taxable events without tax withholding, like this year’s large capital gains and IRA distributions. You can also use the calculator on the IRS website (or ask your tax preparer) what you should set for withholding from your jobs to make sure that is high enough.

[dcn]

Yes a cpa can do that - maybe ask your tax preparer if they have someone they could refer you to. Or you could ask your financial advisor, they usually have relationships with cpas.

[orval]

My dh has extra taken out of his paycheck since the witholding tables don't take out enough. Also, the inherited IRA distribution should have the option to take out taxes. I had one this year and they did withhold. If you sell stock, I would probably hold back what might be owed or pay some estimated based on what you sell.
This year the child tax credit got us too and added to what we owe.

[ohgillian]

I have found it hard to find a standalone person who does tax advising like that. However over time I’ve found that I get that kind of advice to a good extent from my personal advisor at vanguard.

For future years ditto what someone else said about the IRA. I have the same and I have vanguard withhold 99% of the distribution as federal taxes. (99% is the max)

[puppylove64]

A cpa will help you. Your investment person should be able to recommend you to one. Also have the cpa do your taxes on the future

[ds1013]

Apr 13, 2022 6:57:39 GMT -5 puppylove64 said:

A cpa will help you. Your investment person should be able to recommend you to one. Also have the cpa do your taxes on the future

Our tax person is an EA at a CPA firm. I'm a huge fan of her, and she has experience with owning a farm in another state (which I have struggled to find tax people with that kind of experience) and how to deal with that in the best way.
I'll ask if they have CPAs at that firm who might be able to offer this service.

[mich1]

Apr 12, 2022 12:29:52 GMT -5 ds1013 said:

Just got the call from our tax preparer that we owe 16k to the federal and almost 3k to our state.  Yeikes. 

We had a significant pay increase for DH, a decent sized required distribution from an inhered IRA, and a good year in the stock market, so I knew we would owe, but I wasn't prepared for 19k.

In conversation last night with DH, I asked if there is a profession that would look at this year's taxes and tell us/suggest what we should do differently this year so we aren't in this situation again next year?  Our tax preparer is just that, no guidance and our investments people don't seem to do that either.  Are there people who do that? And if so, how do I find them?

DH keeps a running total of what we owe in taxes after we got hit with a $45K tax bill one year out of the blue.  Both of us had to empty our savings accounts to pay the IRS that year to avoid pulling from investments.  

As a result, he now keeps a spreadsheet and updates it quarterly as to taxes paid (even more so now that he's retired and pulling  money from IRAs and investments) to keep what we owe to a minimum - making sure that at least we pay as much as we paid the previous year.  When he sells an investment, he automatically sends the IRS a quarterly payment.