You may be tempted to forget about your taxes once you’ve filed your tax return, but did you know that if you start your tax planning now, you may be able to avoid a tax surprise when you file next year?
That’s right. Now is a good time to set up a system so you can keep your tax records safe and easy to find. Here are six tips to give you a leg up on next year’s taxes:
1. Take action when life changes occur. Some life events such as a change in marital status or the birth of a child can change the amount of tax you pay. When they happen, you may need to change the amount of tax withheld from your pay. To do that, file a new Form W-4, Employee’s Withholding Allowance Certificate, with your employer. Call if you need help filling out the form.
2. Report changes in circumstances to the Health Insurance Marketplace. If you enroll in insurance coverage through the Health Insurance Marketplace in 2016, you should report changes in circumstances to the Marketplace when they happen. Reporting events such as changes in your income or family size helps you avoid getting too much or too little financial assistance in advance.
3. Keep records safe. Print and keep a copy of your 2015 tax return and supporting records together in a safe place. This includes W-2 Forms, Forms 1099, bank records and records of your family’s health care insurance coverage. If you ever need your tax return or records, it will be easier for you to get them. For example, you may need a copy of your tax return if you apply for a home loan or financial aid for college. You should use your tax return as a guide when you do your taxes next year.
4. Stay organized. Make tax time easier on everyone by having your family place tax records in the same place during the year. That way you won’t have to search for misplaced records when you file your return next year.
5. Choose your tax preparer wisely. If you want to hire a CPA, accountant, or tax preparer to help you with tax planning, start your search now and shop around. Ask for recommendations from friends and relatives and check the IRS Directory of Tax Return Preparers on IRS.gov to find tax preparers in your area with the credentials and qualifications that you need. If you already have a tax preparer, give him or her a call and find out which tax planning strategies you can use this year that save you money on your 2016 tax return.
6. Consider itemizing. You may be able to lower your taxes if you itemize deductions instead of taking the standard deduction. Owning a home, paying medical expenses and qualified donations to charity could mean more tax savings. A list of deductions is found in the instructions for Schedule A, Itemized Deductions. As always, if you have any questions please call.
Ready to save money on your taxes?
Planning now can pay off with savings at tax time next year. Call today and get a jump start on next year’s taxes.