Are you already thinking about the upcoming tax season? If so, you aren’t alone. The new year is one of the best times to think about your financial goals so you can make the necessary changes. Here are ten of the best tips to prepare for the 2017 tax season.
1. Organize Your Financial Documents During The Year
One tip that will save you lots of stress is to keep track of your financial records throughout the year. At Gallati Professional Services, our online document management system can help you electronically store and categorize your financial documents. This service is includedin your annual tax preparation fee. The best part is that you can access it at any time during the year.
2. Get Rid Of High-Interest Debt
Another tip for the upcoming tax season is to pay off your high-interest debt. Do you have credit cards that charge more than 10%? Try to pay off the card with the highest interest rate level first. Then you can continue to pay off the rest of the cards until you are out of debt.
3. File Your 2016 Taxes Before The Deadline
You don’t have to wait until the deadline to submit your federal and state taxes. If you want to get a head start on the process you can file early. The Internal Revenue Service will accept tax returns as early as January 23, 2017. This is a great if you are expecting a tax refund since you will receive it sooner. However, if you owe money you won’t have to pay until the April 18, 2017 deadline. You can enjoy an early bird discount at GPS when you decide to send in your financial information early.
4. Contribute The Maximum Amount to Your 401(k) Account
Are you enrolled in a 401(k) plan? If so, try to contribute the maximum amount for the year (which was $18,000 in 2016). This will give you a financial cushion for when you retire.
5. Keep Track Of Your Charitable Spending
If you volunteer for a non-profit or do other charity work, remember to keep track of what you spend. Record the total miles you drove over the year and keep tabs on your receipts or any other records that reveal how much you contributed.
6. Sign Up For A Health Savings Account
A Health Savings Account (HSA) is a great way to save money for future medical expenses. The best part is that the money in the account will continue to roll over into the next calendar year if you do not use it. Ask your supervisor or the human resources department if your company contributes to one. You can also use any money that is left in your HSA for non-medical expenses when you reach the qualified retirement age.
7. File Your Tax Return Electronically
Do you mail in your tax forms every year? You can streamline the process by electronically filing it. It is easier to get a tax refund when you file electronically since the government can deposit it directly into your bank account within 21 days after you file. Electronic filings are included in your annual tax preparation fee at GPS.
8. Contribute the Maximum Amount to Your Individual Retirement Account
Another tax tip for 2017 is to contribute the maximum to your Individual Retirement Account (IRA). You can put up to $5,500 into the account during 2016.
9. Get Tax Breaks For Using Alternative Energy in Your Home
There is no limit to the amount of tax breaks you can receive for using alternative energy in your home. You can get a credit for installing geothermal heat pumps, solar panels, and other tools that reduce your environmental footprint.
10. Work With A Tax Professional To Find More Ways To Lower Your Taxable Income
Lastly, we recommend that you work with a tax professional to discover additional ways to lower your taxable income. They understand what the IRS is looking for and can ask probing questions that may uncover additional tax breaks.
Hopefully these tips can help you make better financial decisions during the upcoming tax season. For more information, please contact us by email or call (865) 281-1461 to learn more about our professional bookkeeping and tax services.