Treating Tax Time as an OpportunityMarch 16, 2016
With less than a month to go before Tax Day on April 18th, many people now find themselves laser-focused on preparing their income tax returns for either themselves, their families or their organization. It can obviously be a deeply involved process, filled with nuances, possibilities and challenges filers have perhaps not yet thought about. Research and attention to detail should be a priority.
Why should people be so strategic and involved, particularly on something that happens once a year and so often seems so routine? That’s exactly the reason they should—because Tax Day only comes once a year, to make sure your filing is done in a way that makes it most beneficial to you. Treating tax filing as a priority could mean a better return for the individual, the head of household or a business owner in terms of potential savings and deductions.
Tax filing season is an opportunity and should be treated as such. With that in mind, here are some tips that can allow filers to do just that, tips that are never too late to put into practical applications:
Organization is Essential—This may seem quite obvious, but a good tax filing starts with proper organization. Make sure you have all of your necessary paperwork in a row, whether you are preparing a tax return yourself or having it prepared professionally. Make sure all pertinent receipts are accounted for, particularly receipts for charitable contributions. Be certain that non-cash contributions are considered—proper documentation will give filers peace of mind in knowing that every box has been checked, and could save you some difficulty down the line.
Be Mindful of All Potential Deductions—Here is the part where you can really start saving some money—there are numerous deductions made available every year to filers that were created to provide relief; the problem is many simply do not know about them. That’s why you need to ask the right questions and do the right research. Questions such as:
- Did you install any energy efficient equipment (i.e. water heater, windows etc.)? If so there are ample tax deductions available which could bring impressive savings.
- Have you considered education expenses and accounted for them? Tuition, college savings accounts, student loans—there is vast potential for savings here. Consideration should also be given for dependent education expenses and who should claim them.
- Did you capture all your real estate and personal property taxes paid?
- Did you pay mortgage insurance? If so, this can be a substantial deduction.
- Do you have any foreign investments?
- Did you pay any dependent care expenses?
Ask yourself each of these questions, and possibly others, when it comes time to thinking about potential deductions. It could prove very worthwhile if you do.
Managing Your Refund—For those fortunate enough to receive a refund—or perhaps more to the point, for those whose careful organization and consideration of all potential deductions has led them to a refund—this becomes a cash infusion that needs to be managed as well.
For starters, it is good advice to always use direct deposit rather than asking for a paper check. It’s a modern convenience, but it’s also a more secure way of receiving money you have earned, and direct deposit will enable your refund to arrive faster. And once the money is in your account, there is still more planning that can be done. Should it be invested? Should it be put back into a business? These are good questions to ask and, once more, can benefit you, your family or your business in the long run.
Remember the importance of Tax Day on April 18th. Every filing brings opportunities.
How BlumShapiro Can Help
Currently serving approximately 280 plans, BlumShapiro has vast experience in understanding the intricacies of your plan and translating that knowledge into an effective audit. Our more than 100 professionals are trained in auditing benefit plans, and experienced in financial reporting, compliance, operations and fiduciary responsibilities. Learn more about our benefit plan audit services >>
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.