Four Tips for a Pain-Free Tax Season
By: The American Academy of Estate Planning Attorneys
New Years Day has come and gone, and April 15th looms in the not-too-distant future. While its true that many of the big tax planning decisions like deferring income or bunching deductions should be made before December 31st, there is still plenty you can do to save money and hassles this tax season. Here are a few simple suggestions:
- 1. Get Organized. Dont wait until April to begin gathering the information youll need to file your tax return. Starting in January, retain all the tax paperwork you receive, including:
- Mortgage and student loan interest statements
- All other tax-related information
If you havent already, begin gathering and sorting last years receipts. This will put you in the best position to be aware of all the deductions available to you. It will also prepare you to substantiate all the deductions you claim, just in case youre one of the lucky taxpayers chosen for an audit.
- 2. Fund Your IRA. If you didnt make the maximum contribution to your IRA before December 31st, you have until April 15th to do so and take advantage of the tax savings. Your contribution is only deductible if you have a traditional IRA, and the current rules are as follows:
The maximum annual contribution is $5,500 if you are under age 50 ($6,500 if you are 50 or older). In order to qualify for a traditional IRA, you must be ineligible to participate in an employer-sponsored retirement plan or you must meet certain income requirements. If you are single, your adjusted gross income cannot exceed $59,000. If you are married filing jointly, it cannot exceed $95,000.
- 3. Pay Attention to Deadlines. You know the deadline for filing your tax return is April 15th, but what happens if you need an extension? You can file Form 4868 to extend your filing deadline to October 15th, but be careful the form only gives you breathing room when it comes to filling out your tax return. Youre still required to estimate your tax bill and pay the IRS by April 15th. Failure to pay on time can result in a penalty.
- 4. Dot Your Is and Cross Your Ts. Before you submit your return, make sure youve signed it and take a second look at all the social security numbers youve entered, paying special attention to your dependents numbers. Failure to include this information for your children can be an expensive oversight without social security numbers, the IRS will not allow the $3,900-per-dependent personal exemption, nor will it grant you the $1,000 child tax credit applicable to children under 17.
A pain-free tax season starts with planning and organization. Take your time, know the rules, make smart choices, and youll save yourself both money and stress as April 15th approaches.
About Our Law Firm
The Law Firm of Flood and Masiuk, LLC is devoted exclusively to estate planning. We are members of the American Academy of Estate Planning Attorneys and offer guidance and advice to our clients in every area of estate planning. We offer comprehensive and personalized estate planning consultations. For more information or attend an upcoming seminar, please contact us at (215) 322-6330 or visit us online at www.floodmasiuk.com.
About the American Academy of Estate Planning Attorneys
This article is written by the American Academy of Estate Planning Attorneys. The Academy regularly publishes articles on various estate planning topics as a free resource to consumers. These articles are intended as an overview of basic estate planning topics and issues, and not legal advice. We recommend that you consult with a qualified estate planning attorney to review your goals.
The Academy is a national organization dedicated to promoting excellence in estate planning by providing its exclusive membership of attorneys with up-to-date research on estate and tax planning, educational materials, and other important resources to empower them to provide superior estate planning services to families in their communities. The Academy expects members to have at least 36 hours of legal education each year specifically in estate, tax, probate, and/or elder law subjects. Since 1993, the Academy has been a highly-regarded and sought-after resource for attorneys and consumers alike, and has been recognized by Consumer Reports, Suze Orman in her book, 9 Steps to Financial Freedom and numerous times by Money Magazine.