April 18 is almost a distant memory for most of us. Tax returns or extensions are filed, documents stored, and refunds are on their way to our bank accounts if not received already.
If tax season 2016 was too hectic for your tastes, there are ways you can prepare for a smoother 2017 tax season by preparing early. Mid-year is the perfect time to assess your individual tax scenario.
Keep track of these milestones:
- Birth or adoption of a child
- Marriage or divorce
- Transferring or relocating for work
- Change in military status or activity
- Death of spouse
- Receiving lump sum distributions, inheritances or settlements
- Starting or selling a business
- Establishing a home office
- Significant medical expenses not covered by insurance
- Job search expenses, including mileage, lodging and relocation expenses
- Collecting Social Security, Unemployment or Social Security Disability Insurance benefits
Each of these milestones will affect your tax status for 2017. Now is the time to consult with a tax pro who can advise you on the best tax strategy for these life events.
Understand the updated tax laws for 2017
Tax laws change frequently at the state and federal level. These changes can include:
- State tax regulations
- Itemized deduction allowances
- Changes in tax credit programs, eligibility or regulations
- Changes in trust and estate regulations
- Retirement account contribution limits
- Income limits for contributions to a Roth IRA
You can begin researching these changes through your state revenue department website, IRS.gov website, or community resources such as workshops or lectures.
You’re not alone, however, if you find the language of these regulations confusing or difficult to understand. Always enlist a qualified tax pro if you need clarification on any tax matter, particularly changes in tax laws or regulations.
If you are a low wage earner, disabled, or a senior, you can access basic tax advice through the VITA program beginning in January of each year. Trained volunteers will assist you with any basic tax questions as well as provide tax filing assistance.
Identity theft and tax fraud are on the rise. Filing early in the tax season will prevent an identity theft ring from attempting to file a fraudulent tax return under your name and social security number.
Last but not least…
Organize your tax documents throughout the year. If you haven’t done so already, set up a filing system for your paystubs, receipts, freelance/side job income, medical/dental expenses, and home office expenses.
There are also many spreadsheet and basic bookkeeping programs and apps available to help you keep record of your income, expenses and deductions throughout the year.
Staying organized year round will eliminate the last-minute rush to gather paperwork and records on tax filing day, making things easier for you and for the tax pro who will be filing your return.
Mid-year is a perfect time to prepare for the 2017 tax filing season. Make note of any significant life change, stay current on changes to tax laws and regulations and file early in 2017.