This is the time of year when our office gets calls from clients needing their tax documents. Although many people keep track of income subject to tax, it is easy to sometimes forget, the extra money you may have had to take out of an account that taxes now need to be paid on.
Let’s explore a few ideas to make Tax Time easier.
- Start in January. Keep a record of income and expenses that are subject to tax. This can be as simple as a planner, where you write things down or there are different software companies that are easy to use and can help prepare your taxes.
- Keep all income and expense related items together. This way if there is ever a question on your return, you have the documents to back up the figures you used.
- Review your previous tax returns – to be sure you do not miss any accounts.
- If you are still employed, your employer more than likely takes care of withholding taxes, however, you should still be aware of your tax bracket and anything you can do to save on taxes. Then maybe starting an IRA or contributing the maximum to the one you have. If you have children, you may be eligible for the child tax credit.
- If you are 73 or older, be sure you take your RMD from your IRA accounts at some point in the year.
- Take your time. Review any changes to the tax code that may relate to your circumstances, to be sure you are taking advantage of any deductions available to you.
Tax Day comes every April 15th. If you stay organized and do a little planning, it will be easier to prepare your return and not get caught off guard with an unexpected tax bill.