Every New Year brings an opportunity for people to make a resolution to change the way they live, eat, or work. If you’re looking for better financial footing, now’s the time.
But the New Year also brings us the chance to better prepare for next year’s tax season. Filing your taxes isn’t the easiest task, and with all those numbers and records, things can get a bit messy.
But starting 2014 off on some sound tax footing can help lower tax bills and plan for a secure retirement. Here’s some tips for starting 2014 the right way.
Keeping receipts for certain expenses and investments is the first thing you should do when starting the new year off on the right tax footing. With receipts, some expenses can be used as a deduction come tax time.
But organization is key to avoid the confusion of locating receipts and other necessary tax records.
One way to keep up on the organization is to buy and use a receipt scanner. They upload copies of receipts and other documents on a computer. That can be a great convenience instead of keeping hard copies that can get lost or misplaced.
A checklist of essential documents can also help. It can go a long way toward ensuring that you’re keeping an eye out for the right financial documents.
Planning for retirement should never be avoided or ignored. Retirement contributions made into a Roth IRA are tax-free, giving you that extra incentive to contribute. Contributions made into a Traditional IRA can be tax deductible. If you have a 401(k), up to $17,500 annually can be contributed as tax-deferred (the limit is $23,000 if you’re at least 50 years old).
There’s a variety of retirement savings plans, and they have their own tax consequences. But make sure to consult with an expert to learn which one is right for you.
The good thing about the tax code is that there’s a swarm of tax deductions available to the average taxpayer. As you go through 2014, make sure to take as many deductions as you can. If done right, that can lead to thousands chopped off your adjusted gross income.
Have a car? You could write off the cost of driving to receive medical treatment, and the cost of using your car for charitable purposes can be written off, too.
If you’re unemployed, certain costs related to finding a new job can be written off as well. These include fees to revamp resumes, headhunter fees, and costs of printing and mailing resumes. Transportation and travel costs for out of town interviews can also count.
Deductions for automobile-related expenses are available, if they’re for business purposes. Tolls, parking fees, gas, oil changes, new tires, and insurance and registration fees can be deducted to the extent they’re attributed to your vehicle’s total miles driven for business purposes throughout the year.
Business dinners aimed at recruiting clientele can also qualify as business expenses. Wining and dining potential clients or customers can serve two purposes: helping your business, and lowering your tax bill. The main purpose of the meal must focus on business. To qualify, a client or customer has to be there, and you’ll have to be able to document the business discussed during the meal (so take good notes).
If your tax situation gets messy, don’t try and handle it alone. The IRS is staffed with experts who can easily outmaneuver the average Joe in tax court.
For these situations, hiring a tax attorney is your best bet. They’re skilled in the 70,000-page tax code, and the attorney-client privilege will help protect confidential information from ending up in court. Also, going through tax court is no easy task. A tax attorney can help you navigate it.
New Year’s resolutions can easily be broken, but your tax bill should always be lowered when possible. That’s more money in your pocket, and more financial freedom for you and your business.
How do you plan on getting a solid tax footing for 2014? Like this post or tweet us at @StopIRSDebt!
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