It seems like people talk a lot about money right around tax season. It is a common frustration to prepare taxes and complaining about it can actually bring people together. Whether you are frustrated with the need to collect all of your documents together, or are looking forward to a tax return, tax time is the time to talk about money. Even though we are right near the deadline, there are still a few quick tips you can do before filing, and a few actions you can take to be ready next year.
- Look Over Last Year’s Returns- Sometimes the best way to prepare is to look back. Looking over last year’s tax return can help you see if your situation has changed much and can also help you remember contributions that you made last tax season that you could take advantage of this season.
- Get Help- There has been an explosion of new tax software out there that asks many questions and even files your return for you. However, there is also wisdom in seeking advice from last year’s returns and seeking planning for future coming years. Good advice can be worth it over the long haul.
- Make your IRA Contributions- It is not too late to make your IRA contributions for 2016 as long as they are signed and processed by the tax deadline. This can be a quick, simple way to reduce your tax liability and provide for your future retirement needs all in one go. Make sure you put your contribution to work by investing it according to your risk tolerance and your time horizon before you would need the money in retirement.
- Charitable Contributions- If you have given money to qualified institutions like your place of worship, do not forget to hunt down proof of your contribution as that may help to reduce your tax bill as well.
- Protect Your Information- This point is often overlooked but becoming increasingly important in today’s digital age. If you file electronically, make sure you use a PIN instead of filing under your social security. If you file by mail, be sure to put tracking on your return so that you can ensure safe delivery. It is becoming easier and easier to steal identities. At the same time, more and more technologies are coming on-board to help protect yourself. Be sure to do your due diligence and ask your tax professional which programs and safety measures they use.
Along with last minute preparations, there are a few wise actions you can take that can help prepare you for next year. First, start getting organized now. Save receipts, credit card statements, and other items either using a file cabinet, or an online organizer such as Evernote. Secondly, if you receive a refund, it might make sense to reinvest any funds you receive. If these are extra funds that you were not counting on for your living expenses, this can be a great time to continue to boost your savings for the future.
Tax time is complicated, can be frustrating, and happens every year. Hopefully this provided a few good takeaway ideas and will help with future tax seasons.