It’s Not Too Early to Plan for Next Year’s Tax Return
May 2, 2012 : Darla Tierney
Now that tax season is over, it’s officially ‘prepare for next tax season’ season.
Though last year’s taxes may be out of sight and out of mind, Future You will certainly be grateful that May 2012 You planned ahead, got organized and stayed ahead of the game before the stress of tax time came back around.
Our friends at the IRS just released a list of helpful tips to help you get a jump on next year’s return. Some of our favorites:
Adjust your withholding. Why wait another year for a big refund? Now is a good time to review your withholding and make adjustments for next year, especially if you’d prefer more money in each paycheck this year. If you owed at tax time, perhaps you’d like next year’s tax payment to be smaller. Use IRS’s Withholding Calculator or Publication 919, How Do I Adjust My Tax Withholding?
Prepare to itemize deductions. If your expenses typically fall just below the amount to make itemizing advantageous, a bit of planning to bundle deductions into 2012 may pay off. An early or extra mortgage payment, pre-deadline property tax payments, planned donations or strategically paid medical bills could equal some tax savings. See the Schedule A instructions for expenses you can deduct if you’re itemizing and then prepare an approach that works best for you.
Strategize tuition payments. The American Opportunity Tax Credit, which offsets higher education expenses, is set to expire after 2012. It may be beneficial to pay 2013 tuition in 2012 to take full advantage of this tax credit, up to $2,500, before it expires. For more information, see IRS Publication 970, Tax Benefits for Education.
One of the most important tax-related projects you can take on today is to revisit (or establish) your organization system for tax documents and important applicable records. If the ol’ shoebox or accordion folder has been working for you, by all means, stick with it — but if you had some difficulty wrangling your receipts and records this year, now is the time to look into other options. Our favorite modern solution: Evernote, an ultra-easy app that keeps your documents organized on your smartphone or mobile device. Find out how you can use Evernote to organize your tax documents here.
What are you doing to get a jump on next year’s tax return?