After you file your 2014 tax return, you may want to forget about taxes for a while. But perhaps you should take advantage of your current familiarity with your financial situation instead. By acting now, you can make next year’s return less taxing. Here are some things to consider:
- Check your withholding for 2015. The best indicator that you need to change your withholding is the bottom line on your 2014 tax return. A large refund means you’ve given the IRS an interest-free loan — money you could have invested yourself. A large balance due can mean you end up paying penalty and interest charges on top of your regular tax liability. To change your withholding, give your employer an updated Form W-4. If you’re newly retired, you may need to start making quarterly estimated tax payments.
- Maximize the benefit you get from tax-deductible contributions to a retirement plan by making your 2015 contribution as early in the year as possible. This extends the time your account can grow tax-deferred.
- Establish your long-term tax planning strategies. Possibilities to consider: a salary-deferral arrangement with your employer, investing in assets that will appreciate rather than produce current income, shifting income among family members to take advantage of lower tax brackets and structuring your borrowing to maximize interest deductions.
- Get your tax and financial records organized. A simple system to track and store electronic or paper records will save you from the last-minute scramble to pull your information together. An added benefit: you’ll be less likely to miss available deductions.
Give us a call at 419.629.3494 or contact us at Mark J. Cisco & Co. to learn about other strategies for easing your tax burden.