Success! Your 2013 taxes have been filed — and you weren’t late! Although the April 15 deadline is behind us, don’t let tax planning plummet from top of mind. Now is the time to evaluate your current return and begin planning for the 2014 tax year.
As you prepare for next year, consider the following tips to act on now for future filing success.
What To Do After Filing Taxes
1. Adjust your withholdings.
If you owed money to the IRS or didn’t receive as much money as you hoped this tax season, now is the time to make changes for next year’s return. Consider adjusting your employer withholdings to deduct more from your pay. Although it will seem like you are making less, you will receive more come April.
If you owed money, you can also pay quarterly estimated payments so you don’t have a huge liability at year end. Estimated payments will also help minimize any underpayment penalty that you may have had in 2013.
2. Strategize your charitable contributions.
Do not wait until the end of the year to think about the charitable contributions. Evaluate your options, and start planning your contributions now.
Consider making donations through payroll deductions. Many employers offer this option so employees can make small contributions each paycheck, over time.
Also, think about contributing appreciated stock. As long as the stock is held for more than one year, you will avoid the capital gains tax and make a charitable contribution for the fair market value of the stock, on the day it is contributed.
In addition to these gifts, start a mileage log to keep track of the miles you drive when volunteering. Fourteen cents can be deducted per charitable mile.
3. Take advantage of employer-sponsored spending accounts.
If your employer offers Flexible Spending Accounts (FSAs), take advantage of it! Employees are able to contribute pre-taxed dollars for qualified expenses, including medical care. You can contribute up to $2,500 to FSAs.
4. Make 529 Plan contributions.
Consider making contributions to a qualified 529 Plan, used to pay for future education expenses. Note that 529 Plans mature tax free, which means there is no deduction on your federal return. What’s more, depending on the state you live in, you may be able to deduct your contributions.
5. Group non-urgent medical expenses.
In 2014, the threshold to deduct medical expenses is 10 percent of your adjusted gross income. To take advantage of this deduction, consider grouping non-urgent medical expenses that are not covered by insurance or pre-tax accounts, like HSAs or FSAs, into one year to potentially take advantage of deducting medical expenses. These non-urgent medical expenses may include: eyewear, dental work or elective surgery.
6. Plan your investments.
Meet with your investment advisor and strategize the timing of your capital gains and losses.
If you take the time now to start organizing and planning for 2014, filing your next tax return will certainly be easier. Plus, you may even get more back next year.
A manager in the tax services group, Heather Cressman has been with U.S. accounting firm ParenteBeard for five years. Her primary areas of responsibility are working with high net worth individuals and their closely held businesses, both partnerships and S corporations. Cressman works directly with clients, financial advisors, family offices and attorneys on compliance and tax planning matters. Additionally, she has substantial experience working with exempt organizations. Cressman was named one of the Pennsylvania Institute of Certified Public Accountants’ Young Leaders in 2013 and was featured on the organization’s website homepage.
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