Individual Tax Preparation for the Year-End

As the end of the year is approaching it is important to start preparing for your taxes to ensure you receive all the deductions and credits you deserve. Thorough planning for taxes for this year and the next several years will be needed due to the passing of the American Taxpayer Relief Act of 2012 (ATRA) and the Patient Protection and Affordable Care Act of 2010 taking effect in 2013 and 2014. Taxpayers shouldcontemplate some common tax strategies including selling any investments that have had any gains or losses this year. If you are expecting a bonus at the end of the year try to get it before December 31st(unless it is a contractual bonus). Taxpayers could also sell stocks acquired by exercise or sell stock acquired if your company gives you the options. If you are self-employed might consider sending bills as soon as possible send bills to ensure you are paid by the end of December.

There are also different ways you can step up your deductions, which is a good plan for taxpayers who are expecting to be in a higher tax bracket.Some tax deductions include paying estimated tax installments in December, instead of January (based on your estimate of state taxes), paying your entire property tax bill due in 2014 (does not apply to mortgage escrow). Taxpayers can also groupexpenses like medical, dental, and miscellaneous itemized deductions. Taxpayers can also deduct charitable contributions (written record is required). Taxpayers should also consider taking advantage of retirement plan contributions. If you do not have a retirement plan and you own a business you should really think about setting one up. Make sure to contribute the maximum amount if you have a 401K ($17,500 for 2013) whether you are an employee or employer. If you are employed or self-employed without a retirement plan you can contribute up to $5,500 a year for a traditional IRA.

Taxpayers can also think about setting up a health savings account (HSA) because they allow you to deduct contributions to the account, investment earnings and are tax-deferred until you take it out and are tax-free if you use them to pay medical bills. There are many different ways you can maximize your refunds and your deductions. It is important to consider your options and prepare for the end of the year. If you have any questions please feel free to contact us at 630-663-1500.