You may be tempted to forget all about your taxes once you've filed your tax return,
but that's not a good idea. If you start your tax planning now, you may avoid a tax
surprise when you file next year. Also, now is a good time to set up a system so you
can keep your tax records safe and easy to find. Here are some tips to give you a leg
up on next year's taxes:
Take action when life changes occur. Some life events (such as
marriage, divorce, or the birth of a child) can change the amount of tax you pay.
When they happen, you may need to change the amount of tax withheld from your pay. To
do that, file a new Form W-4 ("Employee's Withholding Allowance Certificate") with
your employer. If you make estimated payments, those may need to be changed as well.
Keep records safe. Put your 2014 tax return and supporting records in
a safe place. If you ever need your tax return or records, it will be easy for you to
get them. You'll need your supporting documents if you are ever audited by the IRS.
You may need a copy of your tax return if you apply for a home loan or financial aid.
Stay organized. Make tax time easier. Have your family put tax
records in the same place during the year. That way you won't have to search for
misplaced records when you file next year.
If you are self-employed, here are a couple of additional tax tips to consider:
Employ your child. Doing so shifts income (which is not subject to
the "kiddie tax") from you to your child, who normally is in a lower tax bracket or
may avoid tax entirely due to the standard deduction. There can also be payroll tax
savings; plus, the earnings can enable the child to contribute to an IRA. However,
the wages paid must be reasonable given the child's age and work skills. Also, if the
child is in college, or is entering soon, having too much earned income can have a
detrimental impact on the student's need-based financial aid eligibility.
Avoid the hobby loss rules. A lot of businesses that are just
starting out or have hit a bump in the road may wind up showing a loss for the year.
The last thing the business owner wants in this situation is for the IRS to come
knocking on the door arguing the business's losses aren't deductible because the
activity is just a hobby for the owner. If your business is expecting a loss this
year, we should talk as soon as possible to make sure you do everything possible to
maximize the tax benefit of the loss and minimize its economic impact.
This publication is distributed with the understanding that the author, publisher and
distributor are not rendering legal, accounting or other professional advice or
opinions on specific facts or matters, and, accordingly, assume no liability
whatsoever in connection with its use. The information contained in this newsletter
was not intended or written to be used and cannot be used for the purpose of (1)
avoiding tax-related penalties prescribed by the Internal Revenue Code or (2)
promoting or marketing any tax-related matter addressed herein. © 2015