For Mark Roberts’ Use: Now that April has ended, most of us have finished filing our income taxes for 2016. Or, at the very least, you filed an extension and bought yourself some breathing room until October. Whew! So you’re done with tax concerns until next spring, right?
Unfortunately, no, you’re never really “finished” with taxes! There’s certainly no pressing need to work on your 2017 tax return right now. That would really be quite silly. But anticipating your tax liability ahead of time can help you to identify opportunities for savings throughout the year, particularly in the form of deductions.
One common scenario is that people say, “I wish I had known I could get a deduction for that! I would have done that during the year… but now it’s too late!” It’s true that most deductions require you to take action during the tax year, not as you’re rushing to file your tax return the following April.
That’s why it’s smart to create some type of accounting system now, to keep up with potential deductible expenses throughout the year. To get off to a good start, consider starting separate files for each of the following types of receipts:
- state and local sales taxes
- (unreimbursed) medical and dental expenses
- charitable contributions
- moving expenses, if you need to move in order to accept a job
- your tax preparation service
- health insurance premiums
Next year, you might find that those receipts add up to some major deductible expenses. But that’s not all. Make sure to keep up with items such as:
- mortgage interest
- points paid on your mortgage
- dependent care receipts
- contributions to a traditional IRA
- student loan interest payments
- Expenses related to your investments
- union dues and other work expenses
- home office expenses
There is no guarantee that you will be able to claim all of the above expenses as tax deductions, since many are contingent upon income and other limitations. However, keeping all of this information organized throughout the year can help you make simpler decisions throughout the year at tax time next spring.
As always, remember to consult with us about your investment or other financial planning decisions. We can help you to identify money-saving opportunities in advance, so that hopefully you won’t look back with regret at missed opportunities.