Tips to Start Planning Next Year’s Tax Return
For most you, the tax deadline has passed. Starting now to take steps for next year can make your efforts much easier. My next six posts will be things you can do now to make next April 15 smoother.
First, review your 2013 return for the balance due or refund. Then review the withholding on the W-4 given to your employer. Try to make the taxes withheld from your pay closer to the taxes you’ll owe for this year. This is especially true if you normally get a large refund and you would like more money in your paycheck. There is no point in receiving large refunds unless that is the only way you can make yourself set up a “savings account”.
If you owed tax when you filed, you may need to increase the federal income tax withheld from your wages. Use the IRS Withholding Calculator at IRS.gov to complete a new Form W-4, Employee’s Withholding Allowance Certificate. There is no penalty for failing to have enough withheld or for making estimated payments if your final balance due is less than $1,000. This is the target range that I encourage my clients to strive for, if they are fairly liquid in their assets. If they can easily come up with up to that amount they are money ahead. However if they don’t have a savings account and most every monthly dollar is spoken for, it is best to have extra withheld from your paycheck.
Start now to get organized and ready for next year. Planning for next year can now can save time, money and headaches in 2015 when you prepare to file your 2014 return.