Be Prepared for Next Year’s Tax Season

Here are some tips to help insure you are ready when tax season rolls around next year.

1. If you either owed additional tax or received a large refund on April 15, you should consider adjusting your withholdings. Your employer or payroll person can help you adjust this for maximum benefit. Remember that it is OK to claim fewer dependents than you are allowed, but you are not allowed to claim more than you have. The fewer dependents you claim, the more money will be taken out of your paycheck. This will result in a larger refund. Ideally you should owe no additional tax and not get a refund on April 15. If you get a refund, this means the IRS has had your money interest free during the year!
2. Consider itemizing deductions. These include mortgage interest, medical expenses (above a certain limit) and gifts to charity.
3. Keep your past returns in a safe place. You should keep returns and all supporting documents for at least seven years.
4. Organize your records as you go throughout the year. Think about what deductions and credits you will be claiming and keep a separate folder for each one, putting all related documents in each folder throughout the year.