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).
- Determine how you'll prepare your taxes - Are you going to paper or e-file yourself or hire a tax preparer?
- 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?
- Have a tax savings plan in mind - Are there additional tax deductions/credits that you qualify for that you always overlook?
- 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.
- Take advantage of last minute deductions/credits to decrease taxable income or tax liability
- Charity - clean 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!
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.