thinking woman in glasses looking up with light idea bulb above head

As another tax season has come and gone, I thought it would be a good opportunity to pass along some general takeaways which may make next year’s tax experience more seamless, informative and less taxing (pardon the pun). Well, here it goes …

    • Always, absolutely always, review your tax return.  It is very easy to rely solely on the tax professional when it comes to the accuracy and integrity of your return, but you, the taxpayer, are ultimately responsible. It is true that the tax professional should always exercise due care to ensure the completeness and accuracy of your return, but it is incumbent on you that you understand how the financial information you provided is used and applied. Tax preparation can be an extremely daunting task for anyone, so be sure to have your tax professional thoroughly review your return with you, from the basics to the more complex. Do not hesitate to ask questions, get all of your “whys” answered and even do some independent research if it makes you feel more comfortable. 
    • Taxpayers are not saving smart.  Many clients are not taking advantage of most of the tax savings opportunities available to them. Quite often I find that they are not contributing their maximum allowable amounts to their 401k plans, or not sufficiently contributing to their Traditional or Roth IRA’s. Another saving opportunity often neglected is the 529 College Savings Plan.  Although this plan does not provide you with an immediate tax savings, gains will not be taxed when distributions for qualified education expenses are ultimately taken. There are many other tax savings plans and techniques that a taxpayer can benefit from with advanced planning.
    • The importance of good recordkeeping is often neglected. I cannot emphasize enough how important it is for taxpayers to maintain good books and records. Not having sufficient support for a deductible expense means that you might not be able to benefit from that deduction. With the increase in cloud-based storage applications, expense reporting and receipt management apps, taxpayers have many options to easily upload and store their receipts and other tax support. Access to stored receipts can also be granted to the tax professional, which can make the tax return preparation process more efficient.
  • What’s the real reason I’m getting a refund. Simple. You overpaid your taxes during the year. Many taxpayers believe they get tax refunds because, somehow, their tax preparer magically made it happen.  The only reason an individual gets a tax refund is either that the taxes deducted from the regular paycheck or the quarterly estimated tax payments made were in excess of what was ultimately owed on the annual return (once eligible deductions and credits were applied). While it is possible that one tax preparer may be more adept at identifying qualified deductions than another, with all things being equal, a taxpayer will pay the same amount of taxes, or receive the same refund, no matter who prepares their return. The value added that a good tax professional brings is often demonstrated through proactive and strategic tax planning and diligent client service.

Personal Tax Planning

It’s almost the middle of the year.  December will be here before we know it and soon after, the time to file our 2017 income tax return and the realization that we didn’t do sufficient proactive planning to maximize tax benefits and minimize tax liabilities. Contacts us today for a free tax planning consultation and we will be happy to review your 2016 income tax return plus discuss areas where you can take further advantage of available tax incentives.