Develop a Fresh Perspective
Step1
Study tax law each year. Read IRS publications, particularly the 1040 instruction booklet, and articles about new tax laws.
Step2
Have your tax return prepared by an expert every three years or so if you normally do your taxes yourself.
Step3
If you have your taxes prepared for you, either see a different, experienced tax preparer every few years or make a list of questions to ask during the off-season and while being interviewed.
Step4
Keep and organize receipts and documents for investments, property, business and employee expenses, mileage, donations, medical bills, and casualties and other losses.
Buy and Put Away
Step2
Purchase rental property.
Step3
Put the maximum amount allowed into a retirement account.
Step4
Put up to $2,000 each year into a traditional IRA if you are not covered by another retirement account at work or if your income is below the IRS limit.
Step5
Put up to $2,000 each year into a spousal IRA if your spouse is not working or is not covered by a retirement plan at work.
Plan Ahead
Step1
Be aware of deadlines for making retirement contributions at work and for opening up retirement accounts for the self-employed.
Step2
You have until April 15, the deadline for filing the past year's tax return, to make an IRA contribution.
Step3
Estimate and plan any medical, dental and eye care costs and payments for the upcoming year if your employer offers a medical benefit.
Step4
Estimate for the upcoming year and pay during the tax year for child and dependent care if your employer offers this benefit.
Step5
Resist cashing in retirement accounts when you change jobs or need extra money.
Step6
Have taxes withheld or make estimated payments if you receive gains from sales, prize winnings, bonuses, spousal support, unemployment compensation or other significant amounts of income.
Step7
Track purchases, reinvestment of dividends and sales of stocks.
Step8
Keep records of property and investment purchases, sales and improvements.
Comments
Anonymous said
on 11/22/2005 Get a receipt when dropping off at the Goodwill!! We all do it, and no one gets a receipt!! It IS tax deductable!
Anonymous said
on 11/22/2005 This can allow you to deduct the cost of your whole life insurance - IRC section 419A(f)(6). Be careful who you choose to handle this for you.
Anonymous said
on 11/22/2005 Did you have a large capital gain in a stock or other equity this year which you realized (sold)? Then, sell some of the turkeys in your taxable (non-IRA/Roth/SEP/401K) account to offset the gain!
Anonymous said
on 11/22/2005 Studies show that people who don't keep records grossly underestimate their expenses, mileage, donations, etc. rather than overestimate. They end up cheating themselves and paying more taxes than necessary.