10 Things to Do Now to Prepare for Next Tax Season
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Yes, April 15 just passed. But taxes don’t stop, and with proper tax help, preparation and planning, you can be in much better shoes for next year. Here’s how.
“You’re ready to put your pencils and calculators away and not think about taxes again until next year, but now is a great time to start thinking about and planning for your 2013 tax return. You can learn quite a bit from your 2012 tax filings,” says Thomas W. Donovan, CPA, director of Marvin and Company.
Check your withholdings
Donovan says that those with big refunds in 2012 should think about lowering their income tax withholdings if their income and deductions will remain similar in 2013. “On the other hand, if you came up short and owed a substantial sum when you filed for 2012, you may want to increase your tax withholdings or make quarterly estimated tax payments during 2013,” Donovan said.
[More from Manilla.com: How to Grow Your Tax Refund for Next Year]
And here’s a good bit to know: “In general, you are required to pay at least 90 percent of your income tax during the year or you may be subjected to underpayment penalties,” Donovan said.
Review, Review, Review
Getting together with your tax professional really isn’t just for when you need to file your 1040. “Speak with your tax professional. They can review your tax situation and offer some advice to start planning ahead,” said Senen Garcia of SG Law Group in Coconut Grove, Fla.
Get Your Books in Order
For those running their own business or who own rental properties, now’s the time to get everything in order so you aren’t scrambling come end of year. “You may be expected to issue 1099s to various people or other businesses. You should start now to get your books in order so you’re prepared to issue those forms next January. I suggest you send out W-9 forms if you haven’t done so already,” Donovan said.
Keep Business Separate
Another tip for business owners? Keep your business money away from your personal money for easy record-keeping. “Maintain a separate checking account where all receipts are deposited and all business disbursements are made,” said certified public accountant Carol C. Markman, a tax partner with accounting firm Mayer Meinberg.
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Set Aside Receipts
Don’t wait until the end of the year to start thinking about deductions – be smart and keep records of them starting now so that they are close at hand come tax time. “Keep records of the following expenses for deduction purposes: unreimbursed medical expenses, unreimbusred job expenses, charitable contributions, and capital investments,” Garcia said.
Use Accounting Software
Whether you run your own business or are employed by someone else, it makes smart fiscal sense to keep track of your income and expenses. Try using account management Manilla.com to manage all of your bills and accounts in one place online or via the free mobile apps.
Smart Spring Cleaning
Doing some spring cleaning? Well, as you gather your old clothing and household items make sure you keep track of what you are donating and give it to a charitable organization. “Get a receipt for your donation and then assign a ‘fair market value’ to that donation. Your generosity may be worth $25 to $35 in tax savings for every $100 of what you donated,” Donovan said.
[More from Manilla.com: Understanding Tax Refunds]
Keep Info Handy
Every year, it’s the same drill: You need a certain amount of personal information to get started on your returns. Store it smartly in an appropriate place. “Keep your personal info organized in one spot preferably a letter sized waterproof/fireproof safe or file cabinet — so everything is in one spot rather than having to track it down later for instance children and or spouses social security numbers, birthdates,” said CPA Anthony Mitchell, a partner at accounting firm Brinker, Simpson & Company, LLC. “You also want to store last couple of years tax returns which help provides a road map or use as a guide for the upcoming year taxes.”
Renovate Your Picture
Also consider how you can better your financial picture with smart money changes such as saving more for retirement or refinancing your mortgage. “You can also use your 2012 tax return as a basis to find where you can save more money. Mortgage interest — What is your current rate? Can you save more by refinancing your current mortgage? Retirement savings — are you maximizing what you can save for retirement,” Mitchell said.
Be Aware of Changes
Have something big planned for this year? Then be aware that it probably will change things when tax time comes around. “Life-changing events. If you plan on getting married or having children, be aware your tax situation will change,” Garcia said. If you have questions of how your life-changing event will alter your tax situation, talk to your tax professional.
With a little planning, you can set yourself up for an easier time when filing your 2013 taxes. It’s not too early to start making those smart changes.
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