Once tax season is over, you may be tempted to ignore anything that has to do with taxes until next year. Don’t. Be proactive so tax season doesn’t sneak up on you. Try these tips to help you get organized, and remember - the sooner, the better.
Analyze This Year. Look back at your income tax return and review what went well and what could be improved. Make a list of things that helped you reduce your tax bill. If you had deductions, such as education costs, but won’t be able to deduct them next year, brainstorm other ways to balance this future loss.
Predict Change. No, you can’t see the future, but you can plan for it. Will your income tax situation change? For example, starting a family will increase your number of dependents and reduce tax liability. Some life changes require you to take action, such as adjusting the amount withheld from your pay. Be aware and stay on top of how these changes can affect your taxes. Try our withholding calculator to help you plan.
Consider Itemizing. You may be able to lower your taxes if you take the itemized deduction route rather than taking the standard deduction. Itemizing may mean a larger deduction, but you must maintain accurate records of things such as charitable contributions, job related expenses (those not reimbursed by your employer), and eligible medical expenses. You will also need to attach a Schedule A to your Form 1040.
Keep Records Organized and Safe. Have a designated place where you and your family keep tax records and important documents. Searching for misplaced files and records can be stressful and can make the next tax season difficult. Make sure to keep these records, such as last year’s tax return, safe and accessible.
Stay Informed. Nothing is worse than being unaware of tax issues that can directly affect you. Stay up to date on the tax code, and subscribe to our free newsletter to receive tax tips so you prevent any surprises for next year.