One of the universal truths about all New Year’s resolutions is everyone seems to find it hard to keep them. While it’s not the end of the world if you don’t stick to your resolutions, there are some that you may want to work extra hard to keep.
The seven tax resolutions you should make this year
This 2014 tax-filing season, make a few tax resolutions—and stick to them. Take it from me: Promising yourself now that you’ll get your tax information in order will make filing next year’s taxes a lot easier.
You should resolve to:
1. Review last year’s tax return and set up tax goals for this year. Which taxes can you reduce? Which credits can you increase? Which credits can you get that you didn’t use last year?
2. Start gathering your 2013 tax data immediately. This will give you more time to track down missing or incomplete information.
3. Check to see if you qualify for IRA or other retirement plan contributions for 2013. By knowing how much you can contribute now, you can save up the money to fund those accounts by April 15 or the extended filing date.
4. Start keeping logs of everything to track for 2014. This generally includes business expenses, such as mileage, shared computer use, shared rental or vacation property use, and shared video, TV or camera use, or certain itemized deductions such as medical or charitable mileage. Consider looking into budgeting or expense tracking apps or websites that can help make this easier.
5. Monitor your credit report. The first warning that you’ve been a victim of tax identity theft will likely appear in your credit report, so monitor it regularly. You can get one free copy of your report each year from each of the three nationwide credit reporting agencies through annualcreditreport.com. To monitor your report regularly, you can also purchase a credit monitoring product.
6. Prepare a will or living trust. This will ensure that if anything unexpected happens to you this year, your wishes for your finances, assets, family, and medical care will be carried out. Preparing a living will or trust will not only reduce confusion, it will also reduce a variety of costs, such as probate.
7. Set up a budget for the year. In addition to all the responsible expenses, you should also budget for some fun. There are a variety of low-cost options for fun—such as a streaming site for movies and TV or daily deals websites for dining out and traveling—that make inexpensive entertainment easy.
Print out this list and stick it to your bathroom mirror, along with a picture of what you will do with part of your tax savings (trip, kayak, big screen TV). Seeing it every day may give you the incentive you need to keep your resolutions. Plus, it will make you feel good to check off tasks on this list and see what you’ve accomplished.
You should also promise yourself that if you mess up or don’t get to one thing, you won’t get discouraged—and skip the rest of your resolutions.
Eva Rosenberg, EA is the publisher of TaxMama.com ®, where your tax questions are answered. She is the author of several books and ebooks, including Small Business Taxes Made Easy. Eva teaches a tax pro course at IRSExams.com and tax courses you might enjoy at http://www.cpelink.com/teamtaxmama.