General Tips:
- Always itemize your deductions if you exceed the standard deduction threshold.
- Review the tax documents you gave to your tax preparer last year to ensure nothing is missing from your current year documents.
- Inform your tax preparer of major changes from last year that may affect your tax return. Changes include moving, new dependent, marriage/divorce, new job etc.
- Always remember to e-file and setup direct deposit for a quicker refund.
- File early for a quicker refund.
- Use Direct Withdrawal if you owe taxes. You can file your return at any time and the funds will not be withdrawn until April 15th.
- Always file on time regardless of your ability to pay tax liabilities. This will avoid the automatic failure-to-file penalty.
- Be sure to determine your estimated taxes that are due for the current year in order to avoid estimated tax penalties.
- Contribute the maximum amount on your 401k to reduce your tax liability.
- Make contributions to a regular or Roth IRA by April 15th. The upper limit to put in is $5,000 ($6,000 if you are 50 or older), and you must have earned income at least equal to the contribution. Regular IRA contributions are usually tax-deductible, but withdrawals are taxable. Roth account contributions aren’t deductible, while withdrawals are usually tax-free. Income and other limits apply for both. Taxpayers stymied by the limits can do a “backdoor” Roth IRA: put up to $5,000 ($6,000, 50 or older) in a “nondeductible” regular IRA, and then convert it to a Roth account soon after. Income taxes are due on the conversion, but they will be minimal because the account won’t have earned much.
- Filing an extension also provides self-employed taxpayers an extra six-months (until October 15th) to fund a SEP-IRA or SIMPLE IRA.
- Medical deductions need to exceed 7.5% of your adjusted gross income to be deductible on Schedule A (if you qualify).
- Contribute to health savings accounts. You may deduct up to $6,250 per family ($3,100 single) for a health savings account if you had an approved “high-deductible” health plan linked to the health-savings account. The contributions may be made until April 15th.
- Remember to deduct your personal real estate taxes and mortgage interest on Schedule A.
- If you refinanced your mortgage, be sure to properly deduct the points paid if any.
- Points paid when you refinance may be able to be amortized and deducted over the life of the loan.
- Employees who donate to charities via payroll deduction often forget to include the donations on their personal tax returns. The number isn’t on the W-2 form, and often there is no letter from the charity.
- Donors may not deduct their labor or time, but they may deduct mileage or uniforms. For 2012 the allowance is 14 cents a mile. Board members or certain others may also deduct unreimbursed expenses for attending a conference.
- Feb 28th: File information returns, including Forms 1098, 1099, W-2G and form W-3 with Copy A for payments made during 2012.
- March 15th: S Corporation tax returns and tax payments are due.
- Remember April 15th is when Individual and Partnership tax returns and tax payments are due. Only tax returns can receive a six-month extension, not tax payments.
