Marie is a fulltime employee for a furniture maker and she also does freelance design for homes and businesses. Because she owns a home and pays taxes in a high-tax state, she wonders if she is withholding enough money after the new federal tax law put a limit on deductions.
For a definitive answer, Marie should talk to her tax professional, who will not only identify how much Marie will owe in 2018 taxes, but advise her how and when to prepay the correct amount. Possible solutions might include requesting that her employer withhold more from her pay or making larger quarterly tax payments (as a freelance designer).
Another way Marie can pay a little less in taxes is to explore putting more away into tax-advantaged vehicles such as a 401(k) plan or Simplified Employee Pension (SEP-IRA). Both retirement accounts typically offer high annual contribution limits, and balances potentially grow tax-deferred. Beware, though, of some jurisdictions that will accept property tax payment as a tax-deferred charitable contribution. The IRS has not approved this.
Client Profile is based on a hypothetical situation. The solutions discussed here may or may not be appropriate for you.
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