Too early to start planning for next year tax returns?
Is it too early to start planning for next year tax returns? No! October begins the last calendar quarter for 2014 where individuals and most businesses begin preparing for year-end and planning for 2015. Saving time and money in 2015 preparing your 2014 tax returns require planning and organizing now. Want to have stress free tax season? Take the following tips as individuals.
You 2013 tax returns
Keeping a copy of your tax returns in safely comes handy when you need them to apply for loan, refinance or financial aid. Also if you have moved and would change your tax accountant next year, your new accountant would need a copy of your 2013 returns.
Completing a new Form W-4
When you complete this form on starting a new job, you indicate the number of withholdings which translate into how much tax your new employer would withhold from your paycheck. Social security and Medicare withholding rates are set at 6.2% and 1.45% respectively and capped at $117,000 for social security withholding only. If you received a significant refund on filing your 2013 tax returns, the chances are your withholdings are too high. If you’re expecting life changing situations such as buying a house, marrying, having a new baby, adopting etc by 12/31/2014, it’s time to consider adjusting your tax withholdings.
Tax Law Changes
Tax laws are always changing. You don’t have to be a tax professional to stay updated with the changing tax laws. At least twice a year, check with your accountant around mid-year and last quarter of the year if you need to make any change to your withholdings or take advantage of a tax credit before the year ends.
Documents Organization & Storage
Carefully organizing and storing your documents are great ways of time and money savings at tax time. Buy a folder from your neighborhood Office Depot/Staples to store all your tax related records. At year end you would not spend hours looking for important tax records or correspondences. Your accountant would reward you with a low fee because you organize your records.
Tax Credit Advantage
There are a number of federal and state tax credits; however, one particular state tax credit that is often overlooked is College Savings accounts. For taxpayers with kids going to college, you can save on your state withholdings by opening college savings account for your children/grandchildren using funds you would have had withheld as state tax income. Check with your accountant if your state allows college savings plans as tax credits.
Reducing your taxable income
Your taxable income is determined after deductions (standard or itemized) are taken out from your adjusted gross income. The more deductions you have, the less income that is taxable. You can increase your deductions in a number of ways –pay your January 1 mortgage in December and up your charitable donations before year-end among others.
The above are just a few tax planning tips. Each tax payer’s situation is different. Call your accountant for appointment today so your accountant will have adequate time to customize tax plan for you.
Edwin Agbonyitor is a tax accountant, management consultant, certified QuickBooks ProAdvisor, certified fraud/forensic examiner, information security analyst, writer and president & founder of 3E Global Konsulting LLC. Contact Edwin at firstname.lastname@example.org or
Tel: (301) 922-1262
Address: 13841 Palmer House Way, Silver Spring, MD 20904
Is it too early to start planning for next year tax returns? No! October begins the last calendar quarter for 2014 where individuals and most businesses begin preparing for year-end and planning for 2015. Saving time and money in 2015 preparing your 2014 tax returns require planning and organizing now.
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