Tax Planing Season

Man flying tax return to mail box

It's tax preparation season  ... and no I am not going to supply tax  saving tips here, but i do have some suggestions for you.  You still have time to  take action to  take advantage of  all benefits your earned for  2016  or  and  review and plan for 2017, without the pressure of getting your return in the mail.  Not yet anyway.

 1- Google " tax tips for college students" or  " income tax checklist" etc and see if there is anything that applies to you.

Also  try Googling mid year tax planning tips or similar.

 2-  Don't wait to the last minute to review  for a few reasons, but a big one is   if you  (or your preparer) are in a rush at April 15 you can forget something or make a mistake and it can cost you money. If you organize your records now you won't and there will be less stress in the future.  Plus  except  for depositing money in an IRA etc  there are not many things you can do in early 2017 that help your 2016 return.

3- It is a great time to think about what changes you should make for  the remainder 2017  and implement them now.

The other thing to be careful about is "tax advice" from your friends.  I usually answer most questions about tax with the comment  "it depends".   Example friend tells you that you should raise you exemptions on your withholding so you can keep more of your paycheck each week.  The answer is that your friend  is  technically correct"  but it might not be the correct decision for you.

Lady giving bank robber  tax advice

This  suggestion  is a timing issue... you  pay the tax now or pay the tax later when you file your return.

  1- Your friend doesn't really know all about  you.  Maybe you have other  income etc. on which there is  no withholding. 

2-  There is also such a thing as minimum required withholding during the year.  If you don't withhold enough you could face a tax penalty ( that's giving the govt money you should not have to)

There is also the personal side.

Lets say your are a person who  just can't seem to save.    Even though this  might not be the best  personal financial decision ( as an absolute)  it may work for you because getting that little bit back at tax time  has actually been a forced savings plan.

Even with taxes not everything is an absolute.

There is one absolute however.  Before  you make a big financial decision such as  buying  or selling a house, selling a stock etc. make sure you really understand the tax implications so that you are not surprised.  You just can't fix a mistake in the past and it can cost you money.

taxes looming large

On a personal example.  I sold a piece of rental property that I had owned for a long time.  Understanding  options in advance ( i got got tax advice) caused me to make smart decisions that saved me quite a bit of money by not paying unnecessary taxes. 

I hope that this  tax review will take some  of mystery out of taxes and result in you making good decisions that will save you money and get a few extra dollars back on your return.

Prof K