I really can’t believe how fast this year has gone! And now it’s the most wonderful time of the year…it’s the holidays!! It’s a great time where people are happy, enjoy friends and family, and getting ready for the joys of a new year. There is one event, however, that people don’t think about and are usually unprepared for….tax season!

I know normal people don’t think about taxes until it’s forced upon us by the IRS. Well lucky for you….I’m not normal! (LOL) Taxes are something I think about daily so I can provide the most updated and tax advantageous methods to my clients.

With the tax season rapidly approaching, I have compiled a list of the top 8 tips to help you prepare for the tax season. This will make life easier on you and your tax preparer (if you chose to use one).
  1. Determine how you'll prepare your taxes - Are you going to paper or e-file yourself or hire a tax preparer?
  2. Think about and discuss changes in your filing status - Did you get married (...or divorced)? Did you have a baby? Did a child leave the house?
  3. Have a tax savings plan in mind - Are there additional tax deductions/credits that you qualify for that you always overlook?
  4. Gather all documents and file them while waiting on final documents to send to preparer - Documents include, but not limited to: W2s, 1099s, mortgage payments/interest paid, student loan interested paid, child care expenses, business income/expenses, mileage/auto expenses, etc.
  5. Take advantage of last minute deductions/credits to decrease taxable income or tax liability
  • Charityclean out your closets and garage and donate gently used items to a charity of your choice. A few bags full of clothes and household items can create hundreds of dollars of tax deductions (beneficial only if you itemize). 
  • Retirement money that you contribute to your 401(k) or similar employer based retirement plans is excluded from you income, thus, lowering your tax bill. If you’re not maxed out to your annual contribution, use the last few pay periods of the year to direct some money to your savings. You can also apply any year-end bonuses to your retirement plan as it will also be taxed as income.
  • Insurance if you have a flexible spend account that does not offer a grace period nor is eligible to rollover to the next year (up to $500 if your employer elects that option), then it’s time to clean out that account!
    6.   Small businesses: defer revenue, expedite expenses -  You pay taxes on money that you              earned for the year. If you have any last minute clients, allow them to pay early 2016 and              defer those taxes to next year. Similarly, expenses are deducted in the year you paid 
          them. If you know you'll need something for your business in 2016, buy it now if feasible.
    7.   Small businesses: send out W2s/1099s
    8.   Start planning for next year - Create a tax savings plan, adjust your W-4 withholding,                     create better organization/tracking methods, projection of quarterly taxes for small                         businesses.
I hope these tips were helpful and will prepare you for the upcoming tax season. If you have any questions, please post them in the comment section or private message me using the Contact page.

 


Comments

Thank you for your sharing.

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07/23/2016 5:33am

These tips are so valuable! Thank you so much!

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This post will help me to prepare for the tax season. It's very important for me.

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01/05/2017 7:52am

Thanks a lot for the reminder. This tips would help me to deal with tax declaration.

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Thank you for posting these tips! I know the stress tax payers face every time this season comes. It is full of process and undeniably draining for everyone. Aside from thinking about Christmas season, here the tax paying season comes. But these tips would be very helpful. It's better to prepare earlier so that the hassle would be less for you!

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