April 15th is here and hopefully your tax return is completed. So now it’s time to celebrate right. Maybe if you are receiving a refund or if you didn’t have to pay much. The best news is that you don’t have to worry and stress over your return for at least eight to nine months.
Not exactly. You just completed this year’s return and now is the best time to start planning for next year’s return while it is still fresh in your memory. You still remember the pains that caused you to pull out your hair while preparing this year’s tax. Instead of just putting it off for several months why not better prepare yourself by implementing a few changes for next year.
Here are a few questions to ask yourself that will help you prepare for next year’s return:
Do you need to have a better tax filing system?
Does your current filing system work for you or were you scrambling for miss placed docs? How are you keeping track of all tax related documents you will need next year. Instead of pile it up with rest of your mail keep it separate. Maybe even scan it and store it electronically. Having good filing system makes it easier since everything is in one file and will save you time.
Do you need to keep track of charitable donations?
Make sure you keep track of all donation letters and receipts through the year. When you receive them place them in your tax file.
Do you need to increase your retirement contributions?
How much are you contributing to your retirement plans? Consider increasing your retirement contributions which can help lower your taxable income. Now is a good time to increase the amount you are contributing to help you with next years taxes.
Review your non-retirement holdings to make sure you have your cost basis information.
Having to determine the cost basis of something you sold can be time consuming. I know I had this issue this year. Not having the information delayed completing my taxes for a few days. I had to search some old files to find the information. Reviewing your statements to make sure every asset you own has a cost basis. If not, now is a good time to obtain the cost basis information instead of waiting until you have sold the asset and preparing your return.
Do you need to adjust your withholdings?
Are you not having sufficient taxes withheld from your paycheck resulting in you owing taxes or you withholding to much resulting in a large refund? Now is the time to adjust your current withholdings if necessary.
Do you have any major purchases planned for this year?
If so consider how this purchase could impact your tax situation. May provide you some additional deductions.
Any life events happening next year that you are aware of?
Are you planning to get married, having a child or maybe moving to new state? Tax situation maybe better or worse if you are moving to another state. Do a little research to see how these life events will impact your tax situation. Its better to understand now when you have sometime to research than when you are preparing your taxes.
Do you need better tax preparation software?
Was the tax software you used sufficient for you tax situation. Do you need to upgrade or purchase different software next year? Consider it now to give you time to review other software before you make your next purchase.
Discuss with tax prepare ways you can maybe reduce your taxes next year?
If you hired a tax preparer, schedule a time to discuss a few ways you may be able to reduce your tax liability next year. Asking now will enable you to implement those changes sooner than later.
Should you hire someone for next year?
Were you so stressed about the preparation of your return that now you are considering hiring someone. If that’s the case, start asking for a few recommendations for tax preparers. You want to find one who fits your needs in advance of tax season next year. If you wait until, last minute, you may end up hiring the first person that has capacity or end up doing them yourself again.
These are a few questions to ask yourself to help you prepare for next tax season. Hopefully by answering some of these questions now if may help you better prepare for tax time next year and maybe reduce your taxes next year. It always better to be proactive than reactive.
So take action by answering these questions now rather than later. You never know answering these simple questions now may save you money as well as reduces your stress.