I regularly preach to my clients and prospects about being proactive rather than reactive when it comes to taxes. Let me tell you about Brenda and Eddie, no not the popular steadies from the summer of 75 that were immortalized in the Billy Joel song. Brenda was a stay at home Mom until their youngest child started Kindergarten. Brenda decided to return to work as a human resources consultant to bring extra money into the household. Eddie called me to figure out what filing status Brenda should claim. We ran some projections and found just the right amount of withholding. Eddie is the curious type so he had me calculate the “what if” results had Brenda claimed Married with 2 dependents as she originally planned. The result would have been an unfunded tax liability of about $4,000. If someone you know has a spouse that is entering the workforce ask them if they considered the tax consequences of the additional income. Tell them that surprises are for birthdays, not April 15th.
If you have questiosn about this post or any other tax or accounting issue feel free to call me at 678-624-4775 or send an email to Peter@TarantinoCo.com