2018 Tax Planning
2018 tax season is right around the corner and we know many people may be looking to start planning early, depending on how much time they can invest in taxes the closer to April 17th we get. There are many different ways to do your taxes. You could do them yourself, hire a tax specialist, use a quick stop service or even a computer application. What these companies rarely provide is a list of items you need upfront to make the process quick and easy.
We’ve provided a list of free tax planning and preparation tactics checklist for you to download below. But before you move on, read through some of the topics we’ve found relevant and useful.
Organizing The Important Stuff
This useful article from A Mom in Training, is outlined in our free download but see the steps below. We think this is a great idea and she has an extremely useful process to getting it done. When planning for taxes it is best to be completely organized, this way you will have all your paperwork needed. See below for how to complete this easy but time consuming task.
You Will Need
- 1 box of 25 hanging file folder
- 1 box of 150 tabbed manila folders
- A filing cabinet
- File labels (optional)
Step 1: Prepare Your Hanging Files
- Take 8 hanging folders (7 of you don’t have children) and attach the plastic label holder to them. Try and space them out evenly so you can easily read what each one is for.
Step 2: Label Your Hanging Files
- Label the plastic tabs with the following categories: tax information, insurance, credit cards, household accounts, checking/savings, other liabilities, miscellaneous, and children’s accounts.
Step 3: Organize Your Paperwork
- Only keep the previous 3 years of paperwork unless it is your taxes, then keep the last 7 years. Shred any documents older than 3 years and separate the others into piles based on what they are for (electric bills, mortgage documents, water bills, etc.)
Step 4: Label Your Files
- Create a labeled manila folder for each of your piles.
Step 5: Label Your Filing Cabinet
- Label your drawers by year if you have room. If not, group the files by years making sure the most recent year is first.
10 Tax Deductions & Credits You May Be Missing Out On
- Child & Dependent Care Credit: This can be applied for children up to age 13 who need a caretaker while you are working or job-hunting. It can include summer camp, day care and other paid services. You need to be able to identify the provider on your tax return, but they do not need to be a licensed provider. Savings = up to $1,050 for 1 child and up to $2,100 for two or more.
- Your Friend: If someone is crashing on your couch and has been there for a year, you could claim them as a dependent. You must provide half of their support, they have to live with you for the full year, and they can’t make more the $3950.00 in taxable income. Savings = up to $3,950.
- Personal Property Taxes: Annual personal property taxes (such as taxes for a boat or car) are deductible.
- Moving Expenses: If you relocate for a new job, moving expenses could be deductible. You need to have moved at least 50 miles away from your old home and to be working at your new job for at least 39 weeks during the first 12 months after you move. It could cover movers, storage units, tolls, and lodging.
- Medical Expenses: If you have spent more than 10% of your income on medical expense (7.5% if you’re 65 or older), you might be able to claim it. Sometimes you can even claim travel expenses.
- Out-of-Pocket Charitable Contributions: Keep detailed records for out-of-pocket costs. Examples include ingredients for pies you made for a charity, materials you used to make blankets for a homeless shelter, or stamps you bought for a fundraising event.
- Earned Income Tax Credit: This is strictly based on your income and family size. Savings = up to $6,143.
- Gambling Expenses: If you report any gambling winnings, you can claim gambling expenses/losses that don’t exceed your winnings as a deduction. Save any receipts, tickets, and statements as backup.
- Investment-Related Expenses: If you have a safety deposit box that costs a fee or a broker who managers your IRA, they are tax deductible. Also, don’t forget to claim the money you spent last year on tax preparation software or an accountant who prepared your taxes.
- Retirement Savings Contributions Credit: Qualifying contributions include ones that you have made to a traditional and Roth IRA, employer-sponsored 401(k) plans, savings incentive match plans for employees (SIMPLE), 403(b) programs, governmental 457 plans and salary reduction simplified employee pensions (SEP). Savings = up to $1,000.
Click here to download this free Tax Planning Checklist