2014 Tax-Prep Road Map

The April 15th deadline is over and you are ready to think about something other than your tax return.

Not so fast. There is no better time than right now to begin getting organized for this year’s tax return. Proper planning almost always results in better outcomes when it comes to taxes.

Daily Finance (www.dailyfinance.com) has published a thorough article listing monthly tips and to-dos that could make April 15th, 2015 a stress-free day!

April – Squeeze in some last-minute traditional or Roth IRA contributions if you are able (you have until April 15th to do this for the prior tax year).

May – If you received a refund consider whether you need to adjust your withholding. Your goal is to get as close to a zero refund as possible. There’s no need to give the IRS a tax-free loan! Also, use May to create some labeled folders for collecting paperwork related to tax-deductible expenses you make throughout the year.

June – Consider using June to purge your garage and closets to find gently used items that can be donated to charity. And don’t forget to get a receipt!

July – This is the perfect time to consider a midyear review of your savings and investments. For businesses, there’s no better time to have the Firm conduct a midyear review of your accounting records. Reviewing the information now provides you the time required to make adjustments impacting your business and personal taxes for the current year.

August – If you filed an extension use this month to gather forms and receipts you will need prior to the October 15th deadline.

September – If you’ve been thinking about taking any continuing education classes now is the perfect time to do so. You could be eligible to receive a tax credit on tuition and fees.

October – October is the deadline for re-characterizing your Roth IRA conversion. In other words, if you converted money from a traditional IRA to a Roth IRA last year and paid taxes on that conversion in 2013, you can revert the conversion amount back to a traditional IRA — enabling you to treat it like a traditional IRA contribution and thus getting a tax deduction on the amount.

Mid- to late October is also when open enrollment starts at many companies. So use this as an opportunity to reassess your benefits — and possibly find additional tax savings. If your company offers it, consider participating in Flexible Spending Accounts and other dependent benefit programs that offer tax breaks.

November – Think about year-end gift giving to charities and family members. The annual gift exclusion for 2014 is $14,000 – this is the amount you can give another person without paying a gift tax.

Businesses should have the Firm complete a thorough year-end review of accounting records. Reviewing the information this month can save you money on tax day!

December – This is the last opportunity to make charitable contributions that can lower your tax bill. Consider paying major medical bills, as well as property and state taxes before the end of the month.

Retirees over the age of 70½ should withdraw the minimum annual amount required by the government from their IRA by Dec. 31.

For more useful tips and tricks visit www.dailyfinance.com.

Davis & Hodgdon Associates has been assisting individuals and businesses in the Burlington Vermont Metro area for more than 20 years. If you have any questions or concerns please feel free to call 802.878.1963 or email [email protected].

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