Income tax day appears to be really far away on the calendar. But, if you think about it, the end of the year is actually only ten weeks from today. This means, that if you want to take advantage of any tax breaks this year, you need to do an assessment of your financial situation now. Waiting until the filing deadline to prepare your income tax forms might cause you to lose out on key savings that could go a long way toward helping you meet your financial goals. So while you are creating the scariest haunted house and collecting pumpkins, take some time to do these six important things.
Start Gathering and Organizing your Financial Documents.
Just before income tax filing deadline is the worse time to try and find all the documentation you need to support the various tax credits and deductions you hope to claim. Start now to organize files with everything you need to make your filing experience less stressful. Remember, if you cannot support your credits or deductions, you will not be able to use them.
Check on the Balance in Your FSA.
A Flexible Spending Account (FSA) is a great way to save money on your tax bill. Your FSA funds help cover the costs of qualified medical expenses. But the majority of FSAs do not allow you to carry the balance from one year to the next. It has to be depleted by the end of the year. If you see you are still sitting on a balance, this would be a good time to make your doctor appointments and take care of those medical issues that you have been postponing. Need new glasses? Head to the ophthalmologist before the end of the year and use your pre-tax FSA money.
What about the Balance in Your Retirement Accounts?
All of your contributions to your 401(k) or other nontraditional retirement account is pre-tax dollars. This is another opportunity to reduce your tax bill. While you can continue to make contributions to your Roth accounts even after 2017 comes to a close, all contributions to your 401(k) must be made by the end of this calendar year. The more you can contribute, the more money you will save on your income tax. So while you are budgeting for holiday dinners and excursions, try to sock away as much as you can into your 401(k). And, max out your IRA too.
Meet with Your Accountant or Tax Preparer
Now is the best time to meet with your accountant or tax preparer before he or she becomes totally stressed out. They are experts at discovering all the ways in which you can save on your income taxes. If you meet with them now, whatever tax savings advice they give you can be implemented before the year is over. Less money going to Uncle Sam and more to meet your financial goals.
Do Some Fall Cleaning
We all know about spring cleaning, but fall cleaning is the cleaning you do for the benefit of saving money on your income tax bill. Now is a great time to look around the house and see what items you can donate to charities. We all have clothing that has been sitting in the closet for years. Furniture, household appliances, and furnishings are also welcome gifts. Old computers too. As long as everything is in good shape, collect it, deliver and be sure to get a receipt. You will need this for your tax filing.
If you have had a great year, and you see that your tax bill is likely to be high, consider postponing income. You might find yourself in such a situation if you have joined the gig economy and have both a paycheck and income on the side. Are you due for a nice bonus from the boss? Take it next year. Invoice your side hustle clients after the year is over. If you can afford to delay some of your income, you might be eligible for larger deductions, tax credits, and other tax savings benefits.