Yes, Tax Day has come and gone for this year, but the memory of your tax return is likely still fresh. So before you move on, consider the following three questions that may point you toward areas you want to work on before next April 15 rolls around.
Do I need to start my tax filing earlier?
Ideally, you should engage in tax planning year-round. As your trusted advisors, we can help you identify tax savings strategies throughout the year, so set up an appointment to talk to us about how we can help you mitigate tax obligations and make sure that you are taking full advantage of the tax savings available to you.
It’s also worth noting that the introduction of new tax reporting requirements related to the Affordable Care Act added considerable complexity to many individual returns this year. This, combined with delays in receiving tax documents from employers and other entities compressed the amount of time available to file returns. For the future, this means that the earlier you start getting your tax documents in order the more likely it is that your return can be filed promptly. The best strategy is to file (or better yet scan and electronically store) your receipts and any other documents you’ll need at tax time as they come in to avoid having to rush to meet tax deadlines.
Does my tax withholding need an adjustment?
Once you are done filing your taxes, the answer to this question becomes quite obvious. If you found yourself in the position of writing a large, unanticipated check to the United States Treasury Department, you may wish to look at how much tax you are withholding through your employer. Or, if you are self-employed, you should consider increasing your estimated tax payments. On the other hand, if you are receiving a big tax refund, you may want to consider reducing your withholding or estimated tax payments to increase your take-home pay or to fund additional investments in eligible tax-sheltered retirement savings plans.
Is my retirement strategy effective?
On the topic of retirement savings plans, your tax return clearly shows whether you made the maximum allowable contribution to tax-advantaged retirement savings accounts. If you didn’t in the 2014 tax year, you may want to consider increasing your contributions now so you can reduce your taxable income on next year’s return while also improving your financial future.