One of the best things that both individuals and small businesses can do to avoid stress at tax time is to start preparing early. Before the new year comes, there are a few things that can be done in order to avoid a large tax liability, as well as stress in filing.

As I scoured the web to find out what other professionals deem to be appropriate tax planning tips, here are some of the best that I found. 


When it comes to tips for individuals, there are a number of things that you can do. One of the best is to make sure that during the year, you are paying the appropriate amount of tax. Not more and not less. Fidelity Investments does a good job of explaining this necessity in an article on their website. Here is a short excerpt:

“Adjust your withholding.

Ideally, the amount of money withheld from your paycheck, or sent to the IRS in quarterly payments, should come as close as possible to your actual tax liability. Withhold too little and you could have a big tax bill when you file your return. Withhold too much and you’re giving the IRS what amounts to a tax-free loan of money that you could be using to pay down debt or save for retirement (and, potentially, reduce your taxes).

There’s still time to adjust your withholding for 2015 by making changes to the W-4 you have on file with your employer. Or, if you make quarterly payments, you can increase or decrease your payments between now and when the last 2015 payment is due in January. Keep in mind that the longer you wait, the fewer pay periods you’ll have to reach your target. To learn more about how to adjust your withholding, read Viewpoints: “Are you giving the IRS an interest-free loan?”

Small Businesses

There is a ton of advice available for small business owners in regards to stress free tax planning. A large amount of it is focused on making sure that businesses do its due diligence in making sure that records are accurate and accounting strategies are thought out year to year.  Here are a few pieces of good advice from some very reputable sources.

From Bill Bischoff of

Juggle income and deductible expenditures through year end.

If you run your shop as a sole proprietorship, LLC, partnership, or S corporation, your share of the net income generated by the business is reported on your Form 1040 and taxed at your personal rates. Since the 2016 individual federal income tax rate brackets will not be much different from this year’s brackets (see the table at the end of this column), consider the time-honored strategy of deferring income into next year while accelerating deductible expenditures into this year–if you expect to be in the same or lower bracket next year. Deferring income and accelerating deductions will, at a minimum, postpone part of your tax bill from 2015 until 2016.

On the other hand, if your business is doing well, you might expect to be in a significantly higher tax bracket in 2016 (say 35% versus 25% for this year). In this scenario, take the opposite approach: accelerate income into this year (if possible) and postpone deductible expenditures until next year. That way, more income will be taxed at this year’s lower rate instead of at next year’s higher rate.

Finally, we have Stephanie Burns, EA of the KLR Global Tax Blog:

If your business is a cash-basis entity, be smart about how you schedule payments.

It pays to use credit cards for recurring expenses that are scheduled for early 2016. Even though the credit card bills will not be paid until next year, you are able to deduct the charges in 2015.

You can also use checks to pay expenses and mail them right before year end, because according to the tax code, cash basis entities can deduct expenses in the year checks are mailed, not cashed or deposited.

Prepaying expenses is another option—provided that the prepayment does not go beyond the end of 2016, or 12 months after the first date where your business realizes the benefit of the transaction.

Revenue does not have to be reported until cash or checks are physically received, so postpone sending invoices for work done at the end of December so you can be paid in early 2016.

The world wide web is full of valuable insights to all things about tax planning. Every year is another opportunity to get a jump on the process, to make it as painless as possible.