Start Tax Preparation Early

Sure, tax season is still months away but, for those consumers who start handling some tax tasks now, the payoff can be quite large. In fact, with so much time between now and next April 15, you’ve got plenty of time to take the steps you need to make and cut your tax bill significantly. Below are a number of tax issues that you definitely should handle now in order to do that. Enjoy.

Tax Task 1: Pay your quarterly tax payments. If you’re self-employed or receive a sizable amount of income that isn’t subject to withholding taxes, now is the time to make up for any payments you haven’t made so that you don’t get slapped with a penalty later. The fact is, the sooner you pay that money, the smaller your penalty will be.

Tax Task 2: Make a decision about who will claim the children or any other dependents. If your divorced but share custody with a partner or ex-spouse, or responsibility for a relative, only one of you will be able to deduct that person or persons as a dependent on your taxes. The Earned Income Tax Credit for children is this way too so, while you have the time, figure out the math that makes sense for both of you.

Tax Task 3: Apply for an exemption if you haven’t gotten insurance yet. Unless you meet certain exemptions, you’ll be facing a tax penalty this year if you still haven’t purchased health insurance. Talk to your tax specialist about that and get your exemption number from the Health Insurance Marketplace.

Tax Task 4: If you have a flexible spending account, use that extra money. With most companies you’ll be able to carry up to $500 into next year, 2016, but it would be a shame to leave any additional money behind. Understanding the rules of the plan your company has is vital, as well as evaluating your expenses and looking ahead to what they might be in 2015

Tax Task 5: Decide whether you need to accelerate or reduce your income. For example, for some consumers it might make sense to prepay their mortgage and their real estate taxes in 2015, but for others paying them next year might be more advantageous. You’ll need to calculate where you are this year financially, as well as where you expect to be next year, in order to do that.

Tax Task 6: Make sure to offset capital gains and losses. If you were fortunate to sell stocks at a profit this year, make sure to sell some other stocks at a loss to reduce the amount of taxes that you’ll owe in 2016.

Tax Task 7: Give your accountant a call. Frankly, now is the best time of year to talk with your accountant because they won’t be nearly as busy as they will be come January 1.

Tax Task 8: Stuff as much money as you can into your retirement accounts. If you haven’t already, contribute the maximum to your IRA or 401(k) as stepping up your contributions now will definitely cut your liability, tax wise, when you file in 2016.

Tax Task 9: Don’t forget to give to charity. If you itemize your taxes any donations of cash or hard goods that you made to qualified organizations it’ll cut your tax bill next year. Remember that you’ll need a written record of your contributions if they are more than $250 and, if they’re  more than $5000, an appraisal.

There you go, 9 Tax Tasks that you can easily take care of now so that, come tax time next year, you’ll be well ahead of the game.

 

Comments

  1. My wife and I are all about preparing early, and this is no different for taxes and tax season. This is a great list of tasks to complete prior to tax season, and these 9 tasks should really help the process be more painless. It probably wouldn’t hurt either to talk to my good friend who is a tax specialist.

  2. Another tax item is the 1099-MISC form, for any vendor that you pay more than $600 to in a given year. This includes housecleaners, landscapers, babysitters, etc. The deadline is around the beginning of March, so you can’t put it off until you do your taxes the 14th of April!

  3. Doing taxes was literally a nightmare last year and I don’t know how I’m going to make it through this year. With that being the case, I’m trying to prepare and get ready for it the best I can. This article has some good points that I think can help me figure this out and get it done stress free.

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