New Year’s Resolution: Get An Early Start On Tax Season
by Sharon Lechter, founder of Pay Your Family First
You read that right. As one year comes to an end and another begins, people often look to make changes in every aspect of their lives – especially finances. So now is a good time to think about taxes. Yes, really!
It’s not too early to look ahead to tax season to consider steps you can take now to make that often dreaded deadline a bit easier. As a CPA, I’d like to share a few quick tips that may help you to get as much out of your taxable income as possible:
Hire a Tax Representative.
We hire landscapers to manage our grounds. We consult with attorneys to represent our interests. Taxes, too, require professional advice and management.
It’s easy for most people to miss opportunities to reduce their taxable income, given our complex tax code and changing legislation. Sure, you could opt to do your own taxes to save money, but an advisor is likely to identify how to keep more of the money you earn. They have years of experience of seeing how people have handled their finances correctly (and not so correctly) — so you get the benefit of all of that experience. Plus, you can reduce the fees incurred a tax professional by preparing ahead of time by taking just a few steps:
- Gather the appropriate records, including last year’s tax returns, receipts for charitable donations, and year-end investment and property tax statements
- Identify changes in your status if you’ve gotten married or had children
- Consider starting your own business… it will allow you to invest in your future with pre-tax dollars! Ask your advisor to guide you through the process.
Read Up on Tax Legislation and Programs.
If you still choose to do your own tax returns, or if you just want to stay informed, make use of trusted free resources such as www.feedthepig.org, or www.360financialliteracy.org to brush up on legislative initiatives to get the most out of your taxes. Make sure to look into those now, for important year-end opportunities. Many of these tax initiatives were extended through the end of 2012. However, with all the discord in Washington, your advisors may want you to take advantage of them while you can in 2011.
Don’t overlook the most common practices to reduce taxes, such as deferring income, accelerating expenses, and asking for a raise after the New Year.
Considering retirement in the near future? Consult with your tax advisor about the options available to you. If you are looking for more guidance check out It’s Your Turn To Thrive, a program I created with my advisors to help you learn what questions you should be asking your own advisors.
Follow these tips and cross at least one of those New Year’s resolutions off your list! Wishing you peace, joy and prosperity in 2012!
A life-long education advocate, Sharon Lechter is the founder of Pay Your Family First, a company dedicated to empowering children and families to build prosperous futures through financial literacy education, and Pay Your Family First, an innovative new way to spark the entrepreneurial spirit in our children. She is also is the annotator of “Outwitting the Devil“, the co-author of “Three Feet From Gold” and “Rich Dad Poor Dad“.
This is an article contributed to Young Upstarts and published or republished here with permission. All rights of this work belong to the authors named in the article above.