Personal Income Taxes Ver7 (Photo credit: StockMonkeys.com)
If you are reading this, congrats on surviving the 2012 tax season! I also feel fortunate to have lived it, and survived to write about it!
Whether you were absolutely thrilled, or downright disgusted with the outcome of your 2012 tax return, there are plenty of ways and plenty of time to think ahead to next year, and arrive at a better, or at least a more predictable outcome.
Here are 6 considerations for you:
1. Adjust your withholding. Each year, millions of American workers have far more taxes withheld from their pay than is required. Don’t do that! What if you were to lose your job mid-year, and could not access those excessive withholdings until next filing season? What if there is another fiscal-cliff-like delay to next year’s filing season? What if there is a government shut-down and no tax returns can be filed next tax season? What if your identity is stolen, and the thief uses that to also steal your refund? (Yes, that can happen). The best way to protect that money is to take it home with you in your paycheck. Don’t let the government hold on to your hard-earned money like that. Now is a good time to review your withholding to make the taxes withheld from your pay closer to the taxes you’ll owe for this year.
2. Store your return in a safe place. Put your 2012 tax return and supporting documents somewhere safe. If you need to refer to your return in the future, you’ll know where to find it. For example, you may need a copy of your return when applying for a home loan or financial aid. You can also use it as a helpful guide for next year’s return. I know a really cool, funny, and handsome accountant who archives all of his clients tax returns in a secure file portal that his clients can access any time they need to.
3. Organize your records. Establish one location where everyone in your household can put tax-related records during the year. This will avoid a scramble for misplaced mileage logs or charity receipts come tax time.
4. Shop for a tax professional. If you use a tax professional to help you with tax planning, start your search now. You’ll have more time when you’re not up against a deadline or anxious to receive your tax refund. Choose a tax professional wisely. You’re ultimately responsible for the accuracy of your own return regardless of who prepares it. Find tips for choosing a preparer at IRS.gov. I network with the top 200 tax planners in the country, so I bet I have a great contact for you in or near your hometown, so let me know if you need a recommendation.
5. Consider itemizing deductions. If you usually claim a standard deduction, you may be able to reduce your taxes if you itemize deductions instead. If your itemized deductions typically fall just below your standard deduction, you can ‘bundle’ your deductions. For example, an early or extra mortgage payment or property tax payment, or a planned donation to charity could equal some tax savings. See the Schedule A, Itemized Deductions, instructions for the list of items you can deduct. Planning an approach now that works best for you can pay off at tax time next year.
6. Keep up with changes. Find out about tax law changes, helpful tips and IRS announcements all year by subscribing to IRS Tax Tips through IRS.gov or IRS2Go, the mobile app from the IRS. The IRS issues tips regularly during the summer and tax filing season. Or even better, follow my blog and I will be happy to keep you well-informed throughout the year.
Warmly,
Robert A. Gambardella, CPA CTC
