The 2017 tax season is coming, and you'll be getting the information you need to settle up your 2016 tax return with. Take advantage of the tax benefits available to you throughout the year.
First, think about getting organised. It's important to have one place, a large envelope or a file folder where you can accumulate tax information as it arrives. When it is finally time to fill out the tax return, a lot of information is required and every detail counts in making it a smooth process. Here are some tips for a tax-filing season:
Expand retirement plan contributions
If your employer offers a 401(k) or other types of deferred pension plan, make every effort to contribute the maximum amount allowable -- especially if your employer matches your contribution. Otherwise, you are leaving money on the table that could benefit you in your retirement.
If your employer doesn't provide a retirement plan, then consider making a contribution to a traditional individual retirement account or a Roth IRA. The former potentially offers a tax deduction for the year the contribution is made, but both offer tax-deferred gains.
Adjust your withholding
Check your year-to-date withholding and consider changing the taxes withheld if you are expecting a large refund.
This is especially important if you are claiming the earned income tax credit, or EITC, or the additional child tax credit. Why? The IRS is now required by law to hold all refunds on those returns until Feb. 15. The new law was put into place to allow the agency additional time to detect and prevent tax fraud.
Get health coverage in order
Make sure you know what you need to report to the IRS on your health insurance. The shared responsibility provision requires that you and your family have minimum essential coverage or qualify for a health coverage exemption. Otherwise, you must make an individual shared responsibility payment for all months that you didn't have coverage or an exemption.
Contact Gala Tax & Accounting Services today, if you need help regarding your taxation.