It’s that time of year when everyone begins to gather all their tax statements. From 1099s to 1098s and W2s, it’s only the first steps to preparing taxes. Many people rush to file their taxes but filing early isn’t always best. Filing before you receive all the necessary information can cost you money in the long run. If you file and miss a document, you may be penalized or at least need to file an amended return. One step of tax preparation is to verify you’ve received similar forms to previous years and verify each account you may be responsible for has been accounted for.
It addition to gathering statements, don’t forget to make note of charitable contributions, child care expenses, medical expenses, college savings contributions and/or any other expenses that might be deductible. Ideally, a running tally in a spreadsheet or notebook makes keeping track of these much easier and more convenient when it comes time to file your taxes.
You may also want to consider additional retirement savings. You may be eligible to make deductible contributions to a Traditional IRA or after-tax contributions to a Roth IRA to boost your savings. IRA contributions are one of the few ways a person can alter their tax situation after the calendar year ends on December 31st. For 2016, you can make contributions to traditional and Roth IRAs until April 18th.
Even though we consider this the beginning of tax season, it never truly ends. Taxes should be considered throughout the year by keeping track of expenses and income as well as considering periodic contributions to retirement plans and IRAs.
Written by Alex Vassey, a CERTIFIED FINANCIAL PLANNER™ at Vassey Financial Planning & Investments. With systematic planning and proven strategies, Alex Vassey helps families prepare for all stages of life from college savings accounts, to funding a busy and vital retirement, to handling long term care insurance needs. You can reach Alex via email at Alex@vasseyfpi.com or at his office, located at 140 Bountyland Road, Seneca, SC 29672.