Phantom tax occurs when you owe taxes on income you haven’t received in cash, like profits from a partnership or investments that are reinvested.
It’s common in partnerships, trusts, or investments where income is reported for tax purposes but isn’t distributed to you.
Phantom tax can strain your finances since you’re taxed on income you can’t access. Proper planning is key to managing it.
Set aside funds for tax payments or consult a CPA to plan for tax liabilities arising from phantom income.
Phantom tax can be tricky, but Jarrar & Associates CPA can help you navigate it with tailored tax strategies. Contact Jarrar & Associates CPA today to handle phantom tax effectively and avoid surprises!