Opportunities to Start Planning Next Year’s Tax Return
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The tax filing deadline may have just passed for 2011, but planning for next year can start now. Taxpayers that are organized and planning ahead can save time, money and headaches in 2013. Here are a few things to consider for the rest of 2012 to make next April 15 easier:
1. Adjust your withholding: Why wait another year for a big refund? Now is a good time to review your withholding and make adjustments for next year, especially if you would prefer more money in each paycheck this year. Conversely, if you owed this year, making an increase to your current withholding now can prevent you from owing again next year.
2. Store your return in a safe place: Put your 2011 tax return and supporting documents somewhere secure so you will know exactly where to find them if you receive an IRS notice and need to refer to your return. If it is easy to find, you can also use it as a helpful guide for next year’s return.
3. Organize your recordkeeping: Establishing 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.
4. 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 can get you back on track before it becomes a huge hassle.
5. Prepare to itemize deductions: If your expenses typically fall just below the amount to make itemizing advantageous, a bit of 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.
6. 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.
Each household’s financial circumstances are different so it is important to fully consider your specific situation and goals before making large financial decisions. Tax planning now can help you find the right balance in your financial situation for next year. Please feel contact one of our dedicated tax professionals if you have any questions regarding your tax situation and how we can help you plan for next year.