With the current tax season coming to an end, taxpayers can take some simple steps to get organize and reduce the amount they owe the taxman.
As 2011 comes to an end, now is the time to start getting your paperwork in order. Gather pay stubs, investment account statements, along with expense receipts and charitable donation receipts into one folder and identify any missing documents.
If you have any income you are owed, such as a bonus, client payments and self-employment income, it might be a good idea to see if they can be delayed until the start of next year to minimize taxable income for 2011, unless you think you may be moving into a higher tax bracket next year.
Review portfolio statements to assess your investments’ performance. It was a wild year on Wall Street this year, and recognizing capital gains and losses before ringing in 2012 could help minimize your net capital gains tax and maximize deductible capital losses.
Homeowners who can make an extra mortgage payment are eligible to deduct the additional interest paid when filing their taxes.
The government offers a wide variety of tax breaks, so be sure to do some research to see if you qualify for any. Some commonly-overlooked deductions include education, earned-income, energy and child care.
Now is the time to make charitable donations so they can be claimed as a deduction. Be sure to gather receipts from charitable donations made throughout the year, as well.
Maximize your investments in retirement plans. Consider rolling your retirement accounts into a Roth, while it doesn’t provide a tax break instantly, the money grows tax free and is not taxed if proper distributions are made. Paying taxes now on a rollover can save money in the long run since tax rates are low and many account balances took a hit.
April 15 may seem far away, but experts say now is the time to start planning for your tax filing to minimize what you owe Uncle Sam.