Book your beach getaway, host a 4th of July barbecue … and tackle your taxes?
While preparing for the next tax season probably isn’t your top priority right now, summertime is actually an ideal time to get ahead, says Leslie Thompson, CPA, a managing principal at Spectrum Management Group in Indianapolis.
“Summer tends to be less hectic for both the individual and the adviser,” explains Thompson. “Plus, by midyear, you’ll have better information about your 2015 tax outlook—but still have sufficient time to benefit from planning strategies.”
In fact, completing just a few key steps this season can help you save money, time, and maybe even a major headache when April 15 rolls around again.
So, in between firing up the grill and kicking back at the beach this summer, take the time to tackle these five important to-dos.
1. Consider Adjusting Your Withholdings
Maybe you were hit with a fat bill from Uncle Sam this year—or you received a much-too-large refund. Either way, tweaking your tax withholdings now can help you skirt the issue in 2016.
So sync with your accountant or use this I.R.S. calculator to figure out the withholding that's right for you. Then simply submit a new W-4 form to HR.
2. Research Home-Improvement Tax Perks
Plan to knock out a few renos during the summer months? Look into improvements that would also up your home's energy efficiency—and snag you some tax credits.
For example, new solar electric systems or water heaters can qualify under the Residential Energy Efficient Property Credit. Just be sure to hold on to all receipts, as well as manufacturer documents that prove the product's efficiency.
3. Pay Your Second-Quarter Estimated Taxes
So mark your calendar to pay your second-quarter bill by June 15—and start setting aside cash now in a separate savings account for your third-quarter payment, due September 15.
4. Save Summer Camp and Charity Receipts
If you enrolled your little one in a day camp this summer, up to 35% of those costs are eligible for the Child and Dependent Care Credit—so make sure to neatly file away any affiliated bills.
The same goes for charity work this time of year. So if you plan to travel for a charity project—like a service trip with your favorite organization or children's school—you can deduct 14 cents per mile driven. And items donated to charity following a summer cleaning spree can also score you a deduction.
5. Ramp Up Retirement Contributions
Landed a pay bump in the first half of the year? Consider upping your automatic contributions to a 401(k).
Not only will you be padding your nest egg, but since these funds are pulled from your paycheck pre-tax, you'll also lower your total taxable income for 2014.
Now, that's a win-win!
LearnVest Planning Services is a registered investment adviser and subsidiary of LearnVest, Inc., that provides financial plans for its clients. Information shown is for illustrative purposes only and is not intended as investment, legal or tax planning advice. Please consult a financial adviser, attorney or tax specialist for advice specific to your financial situation. Unless specifically identified as such, the individuals interviewed or quoted in this piece are neither clients, employees nor affiliates of LearnVest Planning Services, and the views expressed are their own. LearnVest Planning Services and any third parties listed, linked to or otherwise appearing in this message are separate and unaffiliated and are not responsible for each other’s products, services or policies.
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