If you’re looking to make a New Year’s resolution, here’s a good one to consider: Better managing your taxes.
Here’s how you can start making this year’s New Year’s resolution—and sticking to it:
1) Collect everything. Set up a place where you can store all your financial data. Resolve to set up a bag, box, drawer, or file where you can keep the information you have, and all the new documents that will be flooding in during the year. Your record keeping abilities don’t have to be neat, they simply have to be consistent. Any time you get a receipt or document that might affect your taxes, just add it to your stash.
2) What’s your status? Could any changes in your life in 2014, such as a marriage, divorce or separation, impact your tax filing status? Resolve to review your status for 2015. This could be especially important if you learn that your spouse has developed tax problems such as unpaid estimated taxes or gambling winnings or losses, or unreported income. You might want to consider filing separately.
3) Review your W-4. Update your W-4 status at work, and review it at least twice yearly to make sure you are withholding the right amount.
4) Set up your assets. Log into your brokerage accounts, and make sure you have the basis, or cost, of each asset set up correctly. As you move other securities into the account, plan to transfer the basis of each item. New purchases will show the correct basis.
5) Set up automatic payments. If you are an investor or employer, or are self-employed and must pay quarterly estimates, payroll taxes, or other taxes, set up your Electronic Federal Tax Payment System account with the IRS as well as with your state’s system, if it has one. Commit to using these accounts to make estimated tax payments, as well as any other required payments.
6) Make the most of your miles. Mileage logs are more important than ever. The Tax Court is rejecting vehicle expenses when business owners fail to present proper travel details. Resolve to find the best tools and apps to log your business and your personal miles. This is especially important if you use more than one vehicle for business. These tools can track your mileage to and from each business location, as well as the purpose of the meeting and its date and time.
7) Resolve to do some budgeting. Limiting your impulse spending doesn’t equal depriving yourself. Quite the opposite. By spending less on needless impulse buys, you can enjoy the finer things. For instance, pack a lunch and coffee thermos each week, and the $100-plus you’d typically spend on designer coffee, lunch, and tips could go toward a weekly trip to a fancy restaurant.
8) Resolve to get a tax adviser. Not only can the right person help you cut your taxes, but he or she can also help you set a budget and establish and manage your retirement savings, as well as advise you when it’s time to buy a house or sell securities and assets.
9) One last resolution: Rely on great resources. There are many credible financial resources to tap into on a regular basis. Bookmark them, and be sure to stay current on the latest tips when it comes to taxes, real estate, credit, insurance.
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.