Tax planning is an essential part of finance management and could be make a real difference in reaching your financial goals. Any CPA firm or accounting firm will advice the following:
- Adjust your withholding. Why wait another year for a big tax refund? Now is a good time to 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 preparation time, perhaps you’d like next year’s income tax payment to be smaller.
- Store your return in a safe place. Put your 2011 tax return and supporting documents somewhere secure so you’ll know exactly where to find them if you receive an IRS notice and need to refer to your federal tax return. If it is easy to find, you can also use it as a helpful guide for next year’s income tax return.
- Organize your recordkeeping. Establish a central location where everyone in your household can put tax-related records all year long. Anything from a shoebox to a file cabinet works. Just be consistent to avoid a scramble for misplaced mileage logs or charity receipts come tax time.
- Review your paycheck. Make sure your employer is properly withholding and reporting retirement account contributions, health insurance payments, charitable payroll deductions and other items. These payroll adjustments can make a big difference on your bottom line. Fixing an error in your paycheck now gets you back on track before it becomes a huge tax problem.
- Prepare to itemize tax deductions. If your expenses typically fall just below the amount to make itemizing advantageous, a bit of tax planning to bundle deductions into 2012 may pay off. An early or extra mortgage payment, pre-deadline property tax payments, planned donations or strategically paid medical bills could equal some tax savings. See the Schedule A instructions for expenses you can deduct if you’re itemizing and then prepare an approach that works best for you.
- Strategize tuition payments. The American Opportunity Tax Credit, which offsets higher education expenses, is set to expire after 2012. It may be beneficial to pay 2013 tuition in 2012 to take full advantage of this tax credit, up to $2,500, before it expires.
As professional Orlando accountants, we always advice our clients that tax planning is essential to reaching your financial goals. If you wish to receive a tax planning services, or if you need any help with any tax debt issue, please contact us at 407-344-1012. God Bless.