As fall approaches, we look forward to the holidays. After you’ve had your Thanksgiving turkey and Christmas ham eaten, we savor the promise of spring, just to remind you that the 2017 income tax filing season will soon be upon us. For many people, the act of filing their income tax returns creates significant disturbance and anxiety. Here are some planning tips to help you get your ducks in a row.
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Summarize your business income and expenses; Gather your receipts to support your expenses. By starting now, the process will be less stressful and the risk of missing one or more tax deductible expenses is significantly reduced.
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Summarize your charitable contributions in cash and not in cash.
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If you have investment positions with continuing losses, consider the tax effectiveness of reaping those losses before the end of 2016.
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Document any changes in your financial landscape during 2016. For example, taking on business debt, buying new business assets, buying a new home, selling investments or other assets, and so on.
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Consider your need for professional income tax services. If necessary, hire a tax attorney or income tax professional based on your situation.
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Schedule a tax planning appointment with your tax professional. A tax planning consultation produces strategies that specifically address your circumstances. With three months remaining in the year, there is ample time to implement tax planning advice and minimize your tax liability.
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If possible, increase your retirement contributions. This will help grow your savings and reduce your taxable income.
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Make a regular extra payment on your mortgage; This will help you pay off your mortgage, lower your long-term interest expenses, and lower your short-term taxes. However, it is important to your mortgage provider that the payment is not additional principal. Making an additional principal payment will achieve interest reduction in the long term, but the tax benefit will be lost.
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Clean out your closet and make charitable donations. Charitable contributions are tax deductible, and most importantly, these donations help organizations like Goodwill create jobs for people with disabilities.
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Although flexible spending accounts now have a carry-over feature, arrange to use any excess balances in these accounts.
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If you have not already done so, make any estimated tax payments due. Failure to make estimated tax payments can result in penalties and could lead to a much larger tax bill on April 15.
