Tax Projection FAQs

• Q: What exactly is a tax projection?

  A: A tax projection is a planning tool that gives you a snapshot of what your tax situation will look like before the year ends. It’s essentially a “mock tax return” based on your year-to-date income, deductions, and any known changes. It’s different from a tax return filing, which records what already happened — a projection builds a picture of what’s likely to happen.

• Q: Why would I want a tax projection?

  A: Many clients choose projections because they remove the guesswork of waiting until April to find out what you owe (or might be refunded). Projections help you:

  • Avoid underpayment penalties by adjusting withholding or estimated tax payments.

  • Plan for cash flow (so you’re not surprised by a large bill).

  • Strategically time deductions, purchases, or income.

  • Reduce stress by knowing where you stand before filing season.

• Q: What’s included in a tax projection?

  A: A typical projection completed by AMD Accounting includes:

  • A meeting (or emails) to discuss your current year changes.

  • Estimating and extrapolating your full year tax picture (i.e. salary, business income, and other income sources).

  • Calculating the impact on your tax return 

  • A written summary that explains assumptions, shows the results, and provides notes for planning.

• Q: How is a tax projection different from tax preparation?

  A: A tax return records what happened during the year and is filed with the IRS and state. A projection, on the other hand, is forward-looking. It’s about helping you plan ahead so there are fewer surprises. Both require analysis and calculations, but projections often involve more assumptions and scenarios, which can actually make them more complex.

• Q: Why do tax projections cost what they do?

  A: On average, a projection takes about two hours of professional time. That includes reviewing your year-to-date changes, running detailed calculations, and preparing a written summary with assumptions, results, and planning notes. They can get quite complex, and because we are building a picture of the future — not just recording what already happened — in some ways they are more challenging to complete. 

  Because of the time involved, we bill projections at the equivalent of two hours at our current consulting rate. This way, the cost fairly reflects the work required — and the value of having clarity now and peace of mind heading into tax season.

• Q: Do I need a tax projection every year?

  A: Not necessarily. Some clients only want one if they’ve had major changes (new job, new business, real estate transactions, etc.), while others prefer the reassurance of doing one each summer or fall. Whether you need one depends on how much your tax picture has changed and how comfortable you are waiting until filing season.

• Q: Does having a projection reduce the amount of work at year-end?

  A: The full tax return still requires the same level of preparation. But having a projection in place often makes things smoother — there are fewer surprises, less back-and-forth, and you’ll go into tax season with a clearer idea of what to expect.

• Q: Can a projection save me money?

  A: A projection doesn’t change your tax bill directly, but it can help you make smarter choices. For example, you may be able to adjust your estimated payments, increase retirement contributions, or take advantage of deductions before year-end — all of which can reduce what you owe.