Can being organized and planning ahead really save you time, money and headaches? Yes, says the IRS, and here’s eight great tips for making next April 15th a lot easier. And these are direct from the IRS themselves! Ignore at your own risk:
1. Adjust your withholding: Review your withholding and make adjustments for next year, especially if you’d prefer more money in each paycheck this year. If you owed at tax time, you can change your withholding in order to make next year’s tax payment smaller. For extra help on this, use the IRS’s Withholding Calculator by clicking here, and while on that page, why not download Publication 919, How Do I Adjust My Tax Withholding? for more information.
2. File your records properly: Don’t be one of those people that puts your documents in such a “safe place” that you never find them again. Make sure that your tax returns are filed and labeled clearly for easy access in case you receive an IRS notice and need to refer to them. And, when it comes to next year’s taxes, you can easily pull this year’s out and use it to guide your entries.
3. Put that shoebox to good use: Whether it’s a shoebox or a file in a cabinet, specify to all family members that this is where tax-related receipts live, and it will save you time searching every closet and drawer for those charity receipts or mileage logs come next April.
4. Check your check: Is your employer doing what they should with your paycheck? Don’t assume, and make sure your employer is properly withholding and reporting retirement account contributions, health insurance payments, charitable payroll deductions and other items. Correcting any errors now will save hassle later, and these adjustments can make a big difference in the net amount you bring home.
5. Start interviewing: Do you think you’d like some help strategizing, planning and making financial decisions throughout the year? Then start interviewing tax professionals now before they’re inundated with return work from the organized people, and you’re scrambling to find someone who will deal with that shoebox of receipts. Click here to read our tips on how to choose the best tax preparer for you. Or you could just call for an appointment to “interview” us! Remember, no matter whom you choose, the responsibility for your return lies on your shoulders, so choose wisely.
6. Break it down: Look at the Schedule A instructions and see if there are expenses you can deduct if you’re itemizing your deductions. These include an early or extra mortgage payment, pre-deadline property tax payments, planned donations or strategically paid medical bills, and could add up to tax savings. This is a good time to ask your tax professional to help plan an approach that’s best for you, and about what constitutes a true expense. Click here for our blog on the subject.
7. Higher education: A good mind, and a good tax credit, is a terrible thing to waste. The American Opportunity Tax Credit, which offsets higher education expenses, is set to expire after 2012. If you can afford it, think about paying 2013’s tuition in 2012 to take advantage of this tax credit. It could be up to $2,500! For more information, click here for the IRS publication, or just give us a call.
8. Tax laws change: Guess what? The IRS has an app! You can download IRS2Go or sign up for IRS Tax Tips on their website www.irs.gov to keep up to date with tax law changes, helpful tips and IRS announcements all year long.
We know that each household and business’ requirements are different, and we highly recommend consulting with a trusted tax professional before making any significant financial changes. Give us a call to make an appointment if you’d like to go over this list in more detail. We’d love to hear from you! (714) 637-4552