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Preparing for Tax Season and Beyond


Tax season is upon us, and it’s time to gather receipts, W-2s, 1099s and the other documents that will help prepare 2016 tax returns. But, those who focus on preparing and filing this year’s 1040s and related schedules are missing a good opportunity to make next year’s process easier, save money and ensure that their families are protected.

Steps Toward a Smooth 2016 Tax Filing

Although the regular income tax filing deadline is more than two months away, getting started today can reduce both stress and your tax debt. Lack of preparation can cost taxpayers money, as opportunities for deductions are lost because receipts aren’t properly organized and easily accessible. When you’re in a time crunch, you’re unlikely to make the investment in locating receipts for your charitable contributions, business expenses and other expenditures that could reduce your tax debt. Take advantage of the lead time you have today to:

  • Locate and organize receipts for deductible expenses
  • Create a checklist of income sources to track W-2s and 1099s
  • Consider making an IRA contribution to reduce taxable income – contributions made before April 15 can be counted toward last year

While you’re gathering and organizing your documents, start thinking about next year’s taxes. Setting up a system for organizing your documents now can save you from making this same time investment next year, and will reduce the chances that you’ll miss the opportunity for deductions because paperwork is lost or forgotten.

Financial Planning for the Year Ahead

Since you’re reviewing financial documents and calculating your tax obligation, this is the perfect time to assess and adjust in several areas. For example:

Review Withholding Choices

Too often, taxpayers select withholding options when they start a job and then never give them another thought. Tax time offers the perfect opportunity to revisit whether those choices are still right for you. This is especially important if your income bracket or number of dependents has changed.

Re-Evaluate Your Retirement Plans

Many people choose and maintain retirement plans and contributions by default, simply opting in to an employer’s plan, selecting a percentage and moving on. Depending on your income level and long-term goals, a different type of retirement account, a non-qualified plan such as a life insurance plan, or just a shift in contributions may better protect you and your family.

Review Your Estate Plan

Tax issues and estate planning go hand in hand, in more ways than planning to minimize estate taxes. With your past year’s financial information organized and in hand, this is the perfect time to ensure that your estate plan is up to date and optimal for fulfilling your goals.

Some key issues to consider include:

  • Is your will or living trust up to date? Just as your withholding, educational savings and other financial planning may require adjustment if you’ve married, welcomed a new child, divorced or seen an adult child move out into the world on his own, those changes must be reflected in your estate plans.
  • Is your estate plan organized in a way that maximizes tax advantages during your lifetime and for your beneficiaries?
  • If you’re using a living trust, have you acquired assets outside of the trust that may create complications for your beneficiaries?

Start 2017 from a Position of Financial Strength

Take advantage of this seasonal financial focus to make sure you’re giving yourself and your family every financial advantage, from tax savings to retirement investments to estate planning.

Contact us to discuss your estate planning needs.

The post Preparing for Tax Season and Beyond appeared first on Upchurch Law.

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