This year’s tax deadline may have come and gone, but it’s never too early to start planning for next year. With that in mind, here are five things you can do now to make next April 15 easier for everyone.
1. Review your paycheck. Make sure your employer is properly withholding and reporting retirement account contributions, health insurance payments, charitable payroll deductions, and other items. These payroll adjustments can make a big difference to your bottom line. Fixing an error in your paycheck now gets you back on track before it becomes a huge hassle.
2. 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 money at tax time, perhaps you’d like next year’s tax payment to be smaller. Please call if you need assistance in adjusting your withholding.
3. Organize your recordkeeping. Establish a central location where everyone in your household can put tax-related records all year long. Anything from a shoebox to a file cabinet works. Just be consistent to avoid a scramble for misplaced mileage logs, or charity receipts come tax time.
4. Store your 2020 tax return in a safe place. Put a copy of your 2020 tax return and supporting documents somewhere secure so you’ll know exactly where to find them if you receive an IRS notice and need to refer to your return. If it is easy to find, you can also use it as a guide for next year’s return. Also see the article, Keeping Good Tax Records is Essential.
5. Consult a tax professional early. Due to the ever-increasing complexity of tax laws, it pays to use a tax and accounting professional to help you strategize, plan and make financial decisions throughout the year. Doing so ensures that you will have more time when you’re not up against a deadline or anxious for your refund.
Each household’s financial circumstances are different, so it’s important to fully consider your specific situation and goals before making any major financial decisions.
August and September are great months to do tax planning. Don’t hesitate to contact our office at any time with questions or concerns. A competent tax professional knowledgeable about current tax law changes can help you throughout the year — not just at tax time.