Good tax results come from good tax planning. And it’s simply the truth that this year’s tax returns can be beneficial for next year’s tax filing.
This Year’s Tax Return Can Help Next Year’s Tax Filing
It may be tempting to submit your annual tax returns and then not think about taxes for another year. But there is a better way. Planning ahead can save time and hassle next year and the learning gained in this year’s tax filing can improve next year’s results.
When reviewing this year’s tax returns, you should consider all the deductions taken this year to make sure that all possible deductions can be taken next year. If you expect a refund this year, you can get ahead on next year’s taxes by applying all or part of this year’s refund against next year’s estimated taxes. You can make sure that personal and business expenses are separated and carefully recorded.
How to Prepare for Next Year’s Tax Returns
First, keep this year’s tax return documents in a safe place for ready reference during the year and especially when it comes time to file the tax returns. Then, during the year, keep your tax records organized so that key records are not misplaced nor overlooked. Make sure that any life changes are considered. These include changes in marital status, the birth of a child, change of home location, and purchase of a home.
If you decide to itemize, a charitable donation can lower your taxes. Based on last year’s return, you can adjust your withholding for the next tax year. You can reduce your withholding if you want to hold onto more money this year instead of getting a larger refund next year. You can contribute to a 401(k) or IRA during the year to get greater returns and to get a tax break on the money put into your retirement account.
Tax Filing Mistakes
Mistakes made on tax returns can cost money, provoke an audit, or simply cause stress and processing delays. Consider these common tax-filing mistakes:
- Math mistakes including mistakes in transferring figures and computation errors.
- Misspelled or different names.
- Incorrect direct deposit information.
- Failing to include additional income such as side jobs or contract work.
- Incorrectly reporting one’s filing status.
- Failing to include or providing incorrect Social Security numbers.
- Incorrectly reporting charitable contributions along with failing to have solid backup information.
- Failing to sign and date forms.
- Missing the deadlines prescribed by law.
Reasons to Hire a CPA
To get your tax returns done correctly and without hassle, you should consider hiring a CPA. CPAs offer expert advice and tax assistance to individuals and businesses and can help you minimize your tax liability. They are aware of changing tax laws. They can offer strategic financial planning assistance. They can provide support in case of an audit. They provide stability and consistency in your tax filings. And they can provide peace of mind.
Get Expert Tax, Accounting, and Financial Assistance
Contact Doerhoff & Associates, CPA, based in Jefferson City, MO for professional accounting, financial assistance, and tax preparation that you can count on. Doerhoff & Associates has one goal in mind, to provide comprehensive business accounting services designed specifically for your success.