Another year has come to an end, which means another tax season is about to begin.
Much of what will impact your 2012 taxes has probably already occurred, but even as you prepare to file, there are still some things you can do to make a difference on you return.
A good start, according to financial experts, is to take stock of your financial situation.
“It is the perfect time of the year to reassess finances,” says Mary Ellen Garrett, senior vice president of investments and wealth management advisor for Merrill Lynch in Buckhead.
Review and store your bank and brokerage statements, account numbers, retirement plan and income statements in one place, she says. Doing that will help familiarize you with things that are important for 2012.
Make sure you have a copy of your previous return, says Barbara Weltman, contributing editor to “J.K. Lasser’s Your Income Tax 2013,” (Wiley, John & Sons Inc., $22.95).
“It will remind you of things you did last year and will prompt you to go over things carefully for this year,” she says. Be on the lookout in January for various information, including W-2 forms and 1099s if you earned interest or dividends.
Also, check the return you filed last year for any carryovers you may have to 2012 — such as capital losses in 2011 you didn’t use that can carry over and offset your capital gains in 2012. One example where this may apply would be the use of a home office.
There has been a lot of talk about the fiscal cliff, but there are dozens of rules that are adjusted annually for inflation that can have an impact on 2012 taxes, Weltman says. Get prepared by learning what will be new on the 2012 return. Don’t assume that because you didn’t qualify for a certain tax breaks in 2011 that you also don’t in 2012 because the eligibility ceiling may have gone up.
The 2012 tax year may have ended, but…
Beyond these housekeeping items, Weltman says you might also consider a few ways to reduce your tax burden — even into 2013.
“Just because the tax year has ended, doesn’t mean your ability to favorably reduce your taxes has ended,” she says. “There are some things you can do now.”
You can, for example, make IRA contributions right up to April 15, Weltman says. The same is true for contributions to health savings accounts, a deduction you can claim on your 2012 return and you don’t have to itemize it in order to write it off, she says.
If it all seems too overwhelming, now is a good time to consult a tax advisor for help.
Begin by asking friends and family members to recommend an advisor with a proven record, Weltman says.
You may also wish to meet with a financial advisor to review and update your goals as you move into 2013, says Garrett.
“Now is a good time to think about how next year may look different than the past year,” she says. “There are many financial advisors and so many that focus on different areas…There is always someone available that can help.”
Do you prepare your taxes on your own? What concerns do you have for this year?
– Nedra Rhone, for the Atlanta Bargain Hunter blog