Start Planning Now for Next Year's Tax Return
This year’s tax deadline may have come and gone, but it’s never too early to start planning for next year or to think about setting up a smart record-keeping system. With that in mind, here are seven things you can do now to make next April 15 easier.
1. Adjust your withholding. Why wait another year for a big refund? Now is as good a time as any 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 money at tax time, perhaps you’d like next year’s tax payment to be smaller.
Give us a call if you need assistance in adjusting your withholding.
2. Take action when life events occur. Life events include the birth of a child, a change in marital status or buying a home, and can affect the amount of taxes you owe. When such events occur during the year, you may need to change the amount of tax taken out of your pay by filing a new Form W-4, Employee’s Withholding Allowance Certificate, with your employer. If you receive advance payments of the premium tax credit it is important that you report changes in circumstances, such as changes in your income or family size, to your Health Insurance Marketplace.
3. Store your return in a safe place. Put your 2013 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 return. Or, if you need a copy of your return when you apply for a home loan or financial aid. If it is easy to find, you can also use it as a helpful guide for next year’s tax return.
4. Organize your record-keeping. Establish a central location where everyone in your household can put tax-related records all year long. Anything from a shoe box to a file cabinet works. Just be consistent to avoid a scramble for misplaced mileage logs or charity receipts come tax time.
5. 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 hassle.
6. Consult a tax professional early. If you are planning to use a tax professional to help you strategize, plan and make financial decisions throughout the year, then contact us now. You’ll have more time when you’re not up against a deadline or anxious for a refund.
7. 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 2014 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.
If you need help with tax planning for 2014, we can help you prepare an approach that works best for you. Each Delaware household’s financial circumstances are different so it’s important to fully consider your specific situation and goals before making any financial decisions.
Feel free to contact us any time you have questions or concerns. We can help you stay abreast of tax law changes throughout the year–not just at tax time.