Most people stop thinking about taxes after they file their tax return. But there’s no better time to start tax planning than right now. And it’s never too early to set up a smart recordkeeping system. Here are five IRS tips to help you start to plan for this year’s taxes:
1. Take action when life changes occur. Some life events, like a change in marital status, the birth of a child or buying a home, can change the amount of taxes you owe. When such events occur during the year, you may need to change the amount of tax taken out of your pay. To do that, you must file a new Form W-4, Employee's Withholding Allowance Certificate, with your employer. Use the IRS Withholding Calculator on IRS.gov to help you fill out the form. If you receive advance payments of the premium tax credit it is important that you report changes in circumstances , such as changes in your income or family size, to your Health Insurance Marketplace.
2. Keep records safe. Put your 2013 tax return and supporting records in a safe place. That way if you ever need to refer to your return, you’ll know where to find it. For example, you may need a copy of your return if you apply for a home loan or financial aid. You can also use it as a guide when you do next year's tax return.
3. Stay organized. Make sure your family puts tax records in the same place during the year. This will avoid a search for misplaced records come tax time next year.
4. Think about itemizing. If you usually claim a standard deduction on your tax return, you may be able to lower your taxes if you itemize deductions instead . A donation to charity could mean some tax savings. See the instructions for Schedule A , Itemized Deductions, for a list of deductions.
5. Keep up with changes. Subscribe to the TaxSlayer.com blog or to IRS Tax Tips to get emails about tax law changes, how to save money and much more.
Remember, a little planning now can pay off big at tax time next year.
Source: IRS Tax Tip 2014-61