170 www. ReadMPM. com | www.MountPl easantMagaz i ne. com | www.MountPl easantPodcas t . com For many of us, April 18 represents a looming and ominous deadline —Tax Day. Be it dread of the unknown, anxiety over how to navigate a complicated process, panic about penalties or stress about the effort it takes to submit, fear of filing is real. Even Albert Einstein said, “the hardest thing to understand in the world is the income tax.” To help assuage some common concerns, Mount Pleasant Magazine spoke with Bob Baldwin, CPA/PFS, of Baldwin & Associates LLC for some tips to make Tax Day a little less difficult. Baldwin has over 40 years of experience in the field and understands the concerns his clients have in navigating the complicated, ever-shifting tax code. TIPS FOR INDIVIDUALS Know your withholding. “With interest rates rising, now it is more important than ever to be sure you have adequate tax withholding on income and, if necessary, pay in estimated taxes to avoid interest penalties for underpayment,” said Baldwin. The amount of tax withholding is not just a function of wages, but also of marital status, age and number of children. While it’s too late to impact 2021 taxes, Baldwin recommends doing some homework to avoid future penalties for 2022. The IRS provides a tax withholding estimator on their website that individuals can use to plan ahead and make adjustments to their W-4s. If you find yourself owing taxes this year and don’t feel comfortable estimating your own withholding, schedule a meeting with an expert to help. “My New Year’s advice,” said Baldwin, “check your withholding now.” Look at earning U.S. Treasury interest. Treasury bills and Treasury notes earn U.S. Treasury interest. With limited state and local tax deductions, now is a good time, according to Baldwin, to earn U.S. Treasury interest as it is not subject to South Carolina income taxes. The maturity for T-bills and T-notes vary and should be researched prior to investing, but they are widely considered low-risk, secure investments. U.S. Savings Bonds also pay deferred interest, which means you will not have to report the interest until the bond is cashed. This deferral is a choice for taxpayers. Consider I bonds. According to Baldwin, “U.S. I bonds remain a great tax deferral vehicle.” I bonds are a form of savings bond that pay an interest for six months at the inflation rate determined by the U.S. government. Currently, I bonds are paying interest rates over 5%. They are 100% debt of the federal government and are one of the safest places to invest. While the TreasuryDirect website can be challenging to navigate, it’s worth visiting to see if I bonds are a good fit. Maximize retirement contributions. “Consult your financial advisor, because it’s not too late in January to affect your taxes for last year,” advised Baldwin. Baldwin also suggests setting aside time early in the year to plan for next year’s retirement contributions. Increased contribution amounts to individual retirement accounts and 401k plans have been inflation-adjusted for 2023, and it can help to know what the new limits are. Taxes that aren’t so Taxing Never fear filingwith these tips BY SHERRY WH I T I NG finances Rober t Ba ldwi n of Ba l dwi n and As soc i ates .
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