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It's Never Too Early To Start Getting Organized For Next Year's Taxes
It's A Great Time For A Tax Review
Just after you finish this year's tax return, summertime, or anytime, and the last thing on your mind is next year's income tax return. Seems like you just finished this year's return and it is time to start getting organized again.
The end of the calendar year is ideal, but anytime is the perfect time to spend a little time with your tax records. Time and preparation now will make next year's tax return that much easier to complete. Take a little time to review your current financial situation and organize your tax records.
Do you need to adjust your withholding?
- How will changes Congress makes in the tax law affect your tax liability next year?
- Did you get a pay increase or decrease?
- Start a part-time job or have your spouse start working?
- Get married or divorced?
- Have a new baby?
Many things can occur over the course of a year that will increase or decrease your taxable income.
Any of these may result in you having too much (or too little) federal tax being withheld from your paycheck. You can adjust your withholding by filing a new W-4 with your employer. See your human resources department to get one.
Do you itemize?
For months now you have been throwing your receipts into a drawer, box, or envelope. Worse yet, you haven't been saving them or even know where they are. Take a little time now to locate them and get them organized.
Separate your receipts into categories:
- Income: wages, salary, tips, interest, and dividends
- Medical expenses: co-payments and deductibles for doctors, dentists, or hospitals, prescriptions, glasses and medical devices or supplies
- Taxes you have paid: income, sales, real estate, and personal property taxes
- Interest expenses: mortgage, mortgage points, mortgage insurance premiums, and investment interest
- Donations: cash and non-cash
- Employment expenses: union dues, licenses, professional expenses, required training or education, work uniforms, tools, or equipment, and travel
- Casualty or theft loss(es)
- Other Miscellaneous Expenses: tax preparation fees, safe deposit box, some legal fees
Are you Self-employed?
If you are self-employed, your tax return is often more complicated than that of an employed worker. It's time to get the following organized:
- Business related income documents
- Receipts for the cost of goods sold
- Capital expenses: start-up costs, asset purchases and improvements
- Home office expenses, commercial rent or mortgage expenses
- Other business expenses: advertising, taxes, fees, benefits, insurance, etc.
- Business use of you vehicle: Mileage records or actual expenses (gas, maintenance, insurance) plus parking and toll receipts
- Business travel expenses such as hotels, restaurants, plane, taxi, rental car receipts, etc.
If you are self-employed, it is a particularly important time to get organized before your have twice as many receipts that are doubly disorganized at the end of the year. Small business accounting software, such has QuickBooks, can be very helpful.
Right about now you probably hate me for even bringing up taxes. But, do yourself a favor and take a little time now to get your taxes in order. You'll thank me for it next April.
Any federal tax or tax planning information provided above or linked to this article is not meant to be specific to any particular individual or situation. Anyone who wishes to apply this information should first discuss it with an accountant or tax professional to determine its appropriateness or how it specifically applies to their unique situation.
© 2012 bankscottage