BOSTON (CBS) – This is a good time to do some tax planning. I know folks would rather think about vacations in July.
If you start your tax planning now, you may avoid a tax surprise when you file next year. And if you did not set up a system to keep track of tax information when you filed earlier this year now is a good time to do that. I am assuming that there will not be any major tax reform this year.
Here are some IRS tips:
Take action when life changes occur. Some life events can change the amount of tax you pay. Some examples that can do that include a new job, the purchase of a new home, a change in marital status or the birth of a child. When they happen, you may need to change the amount of tax withheld from your pay.
You will need to file a new Form W-4, Employee’s Withholding Allowance Certificate, with your employer. To do that get online and use the IRS Withholding Calculator tool to help you fill out the form.
Keep your records safe. Put your 2016 tax return and supporting documents in a safe place. If you ever need your tax return or records, it will be easy for you to get them. For example, you may need a copy of your tax return if you apply for a home loan or college financial aid. You will want to keep your tax returns for at least 7 years. Use your W-2s to check your Social Security record.
Get organized. This will make tax time so much easier. That way you won’t have to search for misplaced records when you file next year.
Shop for a tax preparer. If you want to hire a tax preparer to help you with tax planning, start your search now when they are not crazy busy and you can interview several.
If you normally claim a standard deduction on your tax return, you may be able to lower your taxes if you itemize deductions instead. To figure out which way is better you will need to gather up your tax deductions to see if they are more than the standard deduction.
Planning now can pay off with savings at tax time next year.
You can hear Dee Lee’s expert financial advice on WBZ NewsRadio 1030 each weekday at 1:55 p.m., 3:55 p.m., and 7:55 p.m.
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