No one likes unplanned tax surprises, especially when you owe. Now is the time to start your tax planning for next year by looking at these 6 areas:
1. The first thing on your tax planning to-do- list is to make sure you have a qualified tax professional or CPA. If not, this is the time to start shopping for one. Take your time to make an informed decision and once you have selected a qualified tax professional, they can guide you down the tax planning path. a good tax professional can give you tax tips and while you are ultimately responsible for the accuracy of your return, they should be current on the most recent tax laws and requirements.
2. It’s never too early to look at your tax withholding. If you owed taxes on your individual tax return, then you’ll want to increase the federal income tax that was withheld from your wages. If you received a large refund, you can withhold less an d receive more throughout the year in your paycheck. The IRS is getting stricter about individuals withholding amounts that are closer to the amount they will owe at the end of the year.
3. Tidy up your records. Designate a spot for all tax-related records such as receipts, mileage logs, and tax forms when they start arriving. This will make tax planning easy on you and your tax professional will be happy.
4. Are you itemizing your deductions? In some cases, on your individual tax return when you claim a standard deduction, you may be able to lower your taxes if you itemize instead. For instance, if you make an early or extra mortgage payment or property tax payment, you might see some tax savings, which takes a little tax planning but is worth it at the end of the year.
5. Once you receive your individual tax return from your accountant, be sure to store it in a safe space where you can easily find it. Chances are you’ll need it if you plan to seek financing for a house in the upcoming year. It will also serve as a tool in your tax planning.
6. Be pro-active and keep up with tax changes. Yes, you have hired a tax professional to guide you and do the heavy lifting but you can never be too informed Check IRS.gov or IRS2Go, a mobile app.