The holidays are over, the decorations have been stored away and now it’s now time to start thinking about taxes. Ugh, right?
Well, even though the official deadline might be months away, (Tuesday, April 17) this is a critical time to get your finances in order. Here are six tax tasks and suggestions from Wisebread.com to help get you ready:
1.Check Your Withholding
Has your family size changed this year? If it did, contact your human resources department to update your withholding so you aren’t overpaying or underpaying your taxes throughout the year.
2.What’s Changed for This Year Versus Last Year
Yes, pull out your 2016 tax return and consider any changes that have occurred in your life since you filed your taxes for that year. Did you relocate to a new county, city, or state? Did your marital status change, and you’ll be filing jointly? Did you change jobs or take on any freelance work? These changes can impact your tax filing, especially if you itemize your expenses.
For example, if you did relocate to a new city this year and now work full-time from home, you’ll want to have any job search expenses, home office and work-related expenses, and any moving costs detailed and organized before you visit your accountant or start the preparation and filing process on your own. These costs are potentially deductible on your taxes if you have records to support them, suggests the website Wisebread.com.
If you moved this year, make sure your employer(s) (full-time and freelance) from 2017 have your updated address so that you get your W-2 forms.
3.Big Retirement Contributions
Are you maxing out contributions to your 401(k), 403(b), and/or IRA accounts? If not, could you afford to increase your contributions to meet or get closer to the max for the year? You can contribute up to a maximum of $18,000 (plus an additional $6,000 if over age 50) to your 401(k) or 403(b) for 2017 until December 31. IRAs give you more flexibility with your 2017 contributions — you can contribute up until you file your 2017 taxes or Tuesday, April 17, 2018, whichever comes first. You can contribute up to $5,500 per year to an IRA (or $6,500 if over age 50), suggest the website Wisebread.com.
4.How Freelancing Can Help Retirement
Do you do any freelance work? You still have time to set up and contribute to a retirement account that will have tax benefits for the 2017 tax year. Consider opening a Simplified Employee Pension Individual Retirement Arrangement (SEP IRA) account. SEP IRA accounts are specialty retirement accounts created for the advantage of business owners and their employees. If you’re a freelancer, this applies.
These accounts can be opened and funded independently from any other retirement accounts you have, such as traditional and Roth IRAs, as well as 401(k) and 403(b) accounts from employers. Like other IRAs, you have until you file your 2017 taxes or Tuesday, April 17, 2018, whichever comes first, to set up and fund an SEP IRA for 2017. For 2017, contributions to an SEP IRA cannot exceed the lesser of 25 percent of your compensation or $54,000, suggest the website Wisebread.com.
5.Prep Deduction Receipts
Rather than letting receipts accumulate over the year, keep track of them all year round via a spreadsheet each month to make tax filing quicker and easier. Don’t forget about any job-hunting expenses, too: Make sure to take special note of those expenses related to job searching, since they will be itemized in their own category, suggest the website Wisebread.com.
6.Consider Homeownership Changes
Did you buy or sell a home in 2017? This change has big implications on your taxes. Make sure you have all of your home purchase or sale paperwork in order, so you can account for it in your filing.
April may be months off, but if you spend some time on tax preparations now, you’ll be ahead of the game!