It’s Not Too Early to Begin Preparing for the 2016 Tax Filing SeasonMay 12, 2015
Alan T. Huberman, CPA, MST
Thinking about taxes may not be at the top of your list this summer, but it’s really not too early to begin planning for the 2016 filing season. Although the current filing season has just ended, there are some steps that you can take now to help avoid a surprise tax bill when April 2016 rolls around. And now that you have had a chance to review your tax returns, this would be a great time to begin to plan for next year when things are still fresh in your mind. Remember how stressful it was for you to find that missing tax document? Why not take the time now to set up a system to keep your tax records safe and easy to find and not have to endure that stress again?
Below are some tips to help give you a leg up on next year’s taxes:
Consider adjusting your federal and/or state income tax withholdings based on any contemplated changes to your current year’s tax situation. You can do so by filing a new federal Form W-4, Employee's Withholding Allowance Certificate, with an employer if certain life circumstances have changed (such as a change in marital status or the birth of a child). A new child could mean an additional exemption and/or tax credits that might lower your tax liability. Conversely, getting married (or divorced) could change your income, making it advantageous to readjust your withholdings accordingly.
Maintain accurate and organized tax records, such as the HUD-1 document for the sale of real estate, any home loan documents, financial aid documents as well as the proper support for any charitable contributions. Deductions must be substantiated with proper support, and staying organized now will help facilitate the tax return filing process.
Plan to increase itemized deductions. If you plan to purchase a house, contribute to charity or incur medical expenses that may not be reimbursed during 2015, it may be beneficial to consider whether itemizing deductions would be more beneficial than claiming the standard deduction for 2015. You may decide to contribute to an FSA or an HSA to help pay for any unreimbursed medical costs using pre-tax dollars.
Report any changes or projected changes in income to the Health Insurance Marketplace (if you obtained insurance through a marketplace). Income affects the calculation of subsidy payments. Recipients of the advance premium tax credit may owe tax for 2015 if their subsidy payments are too high.
- Stay informed of the latest tax law changes. Keeping on top of developments can reduce confusion in the long run.
As with any major task that you undertake, planning will be the key to your success!
Disclaimer: Any written tax content, comments, or advice contained in this article is limited to the matters specifically set forth herein. Such content, comments, or advice may be based on tax statues, regulations, and administrative and judicial interpretations thereof and we have no obligation to update any content, comments or advice for retroactive or prospective changes to such authorities. This communication is not intended to address the potential application of penalties and interest, for which the taxpayer is responsible, that may be imposed for non-compliance with tax law.