So you got your income tax return done
and sent on time. Congratulations! You may be enjoying that nice
refund about now. But before the joy of the moment overwhelms your
memory, think back to those days before April 17, when
you were fighting to get that return completed and sent in.
If you'd like to avoid the crazy confusion, the feeling of
disorganization and, for some, that sense of impending doom,
consider laying the groundwork now for next year's tax
time. That's right, start now. Today. Or maybe this weekend. At any
rate, any steps you take now can begin the process of smoothing out
the Road to Taxville.
Here are a few of the things you can do right now that will keep
those beads of sweat to a minimum in a year's time:
Store Your Return in a Safe
Place -- Keep a paper copy of this year's newly
filed tax return in your safe deposit box, in your home safe, or in
your home files. Or, how about all three? Wherever you decide to
store your return, make sure it's a place that's available and
secure. No points if you squirrel your return away in a nook that's
so secure, even YOU don't know where it is.
It's Time to Get
Organized -- This is especially important if you
itemize, and you found yourself awash in receipts at tax time. Find
a place in your home where everyone can put their receipts and
other financial paperwork during the year. It can be a file
cabinet, it can be a shoebox. But if it's all in one location, you
won't be scrambling to find your supporting paperwork when you sit
down to work on next year's taxes.
Withholding -- Sure, it's nice getting a big
refund, but wouldn't it be better to get a little more in your
pocket every paycheck? Your withholding may be set too high, and
that may be why you're getting a refund. You can use our handy
Withholding Calculator to figure if you're having too much held
back from your paycheck. Of course, this advice holds if you had a
balance due to the IRS. Your withholding may be too low. Either
way, consult IRS Publication 919, How Do I Adjust My Tax
Check Your Paycheck
-- This sort of goes hand-in-hand with the withholding step. Look
over your paycheck to see that the amounts being taken out for
benefits, if any, and other items are what they should be. If those
amounts are out of line, contact your employer, or the accounting
or human resource departments.
Work Out Your Deduction Game
Plan -- If your deductions typically fall just a
bit short of the amount that makes itemizing worthwhile, a little
planning could make all the difference. Things like early or extra
property tax, mortgage or loan payments could equal some tax
savings, likewise planned donations or even some paid-off medical
bills. Take a look at the Schedule A instructions (available here) for
expenses you can deduct if you're itemizing -- then see if you can
come up with a strategy that works for you.
Study Up on Your Tuition
Payments -- Be forewarned: The American Opportunity
Tax Credit for higher education expense is set to expire after
2012. That means it could be beneficial to pay 2013 tuition in 2012
to take full advantage of the credit, which is worth up to $2,500.
Check out IRS Publication 970, Tax Benefits for
Keep on Top of
Changes -- You can stay ahead of the tax law curve
by subscribing to the IRS' free tax tip service. The
IRS also has IRS2Go, a mobile app for your
phone. By reading the regularly distributed Tax Tips, you can watch
for changes in taxes that could either help your current tax
situation -- or give you a heads-up about a potential problem you'd
want to avoid.
Gut Check: Is It Time for a
Professional? -- Many times, as we get older, our
tax landscape gets more complicated - kids in college, home repairs
or improvements, retirement accounts, real estate holdings, or
maybe you're taking care of your parents. All these can be really
tricky to deal with, especially in a changing tax environment.
Consider using a tax professional to help map out your tax
landscape -- and be very honest with yourself. Remember, the money
you save by doing your own taxes could evaporate very quickly if
you miss a deduction, or have to pay a penalty because of a mistake
on the return. Start looking now at the tax professionals in your
area, so you don't have to do any "last-minute" shopping.
You can download the IRS tip sheet on How to Select a Tax Preparer
The point with all these ideas is to erase your tax turmoil by
spreading the work out over the course of the year. So whatever you
can get done now, means smooth sailing next April.
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