Now is the time of year when people begin to think about peace, generosity-and taxes?
While it may seem to be much too early to worry about filing your tax return, the end of the year is a great time to get your records in order and take other steps that will minimize the hassles when tax time does roll around. It’s also often your last chance to take advantage of deductions or other tax-saving opportunities for the year.
The Connecticut Society of CPAs provides this advice on getting a head start.
Get an update
There are some dramatic tax changes set to take place in 2013 if Congress does not act before the end of the year. In some cases, we may not know until very late which of these changes will occur. If you’re not sure what impact the tax uncertainty may have on your own taxes — or on your small business, if you own one — it’s a good idea to get informed about what’s on the horizon and what it may mean to you.
A CPA can fill you in on the details and provide insights on any steps you should take.
Set your records straight
No matter what tax laws may affect you, it’s always important to approach your tax return preparation with clear and complete records of your income and relevant expenses for the past year. That means getting your receipts and document out of the shoe boxes and organized.
Having comprehensive documentation can ensure that your return is accurate and that you are able to take all the deductions or credits for which you qualify. It can also make it easier for a CPA to offer tax planning advice that can help you minimize your taxes now and in the future. If you’re not sure what you’ll need, ask a CPA for details.
Safeguard your information
If you lose your financial records due to disaster or theft, would you be able to replace or reproduce them? If possible, try to keep electronic backup of all important documents, including past year tax returns and bank statements.
Also consider storing important documents in off-site storage, such as a bank safety deposit box.
Take those last-minute deductions
Have you contributed the maximum allowed annual amount to an individual retirement account? Although you might not qualify for a deduction on your tax return, you generally have until April 15, 2013, to add to your account pre-taxes. If you’ve been meaning to set up a tax-advantaged college savings plan, or add more to an existing plan, you often have until year-end to get a state tax deduction or credit for a contribution this year.
Additionally, you should act now to support your favorite charity-donating gives you the chance to do good, and get a deduction for this year’s return. A CPA can help you determine what deductions you are eligible for and explain what steps to take now to maximize your opportunities.
Simplify with social media
Once you’ve filed your return, how can you track what’s become of your tax refund? There’s an app for that. IRS2Go is an Internal Revenue Service smartphone application that lets taxpayers check on their status of their tax refund and obtain helpful tax information.
The Service recently added features that connect you to the IRS YouTube channel and the latest IRS news and enable you to access your tax records. Check into this and other free applications now that can help make tax time easier next year.
The Connecticut Society of Certified Public Accountants supplies this column. For more information, visit www.cscpa.org