Hardwood Floors February/March 2017

BUSINESS BEST PRACTICES

By Bree Urech-Boyle

Tax Basics

Tips for Preparing for Tax Season

income. If you prepare your taxes early, you can see how close your taxable income is to threshold limits for certain deductions. If you are close to one, a small retirement contribution not only increases your chances of not outliving your retirement savings,

We are already a couple of months into 2017, which means tax season is upon us. Do you feel confident about what lies ahead for your 2016 tax return? If you are like many people, you would rather put your head in the sand than think about preparing and completing your tax return. You might reason that there isn’t anything you can do to change it, so you might as well not waste any time thinking about it. While it is true that many tax planning options for 2016 have expired, there are still some things you can do to help your bottom line. Additionally, now is a great time to start thinking about your taxes for the 2017 tax season. Whatever you do, try to not get overwhelmed and take it one step at a time. A little preparation goes a long way. There are many benefits to filing your taxes as early as possible: • Your chances of identity theft increase the later you file • Gives you time to track down missing documents • Allows your tax preparer time to give you more attention before they get busy • Early filers get their refunds much faster (even faster for those who e-file) • See a snapshot of your tax situation and reveal tax savings strategies • Peace of mind. Who wants to deal with that anxiety until April (or later if you extend your return)? Many retirement savings contributions made by the tax filing deadline (April 17, 2017, this year) can help reduce your 2016 taxable THE EARLY BIRD GETS THE WORM

but also could reduce your tax bill significantly. Even if you aren’t close to a deduction income

limit, it will still reduce your taxable income as long as you contribute to an eligible retirement account like a deductible

individual retirement account (IRA). Do you take one of your children to jobs with you? Maybe you pay

them a wage for their time. Your child could put their earned income

into a Roth IRA. Roth IRA contributions grow tax-free, and since you contribute to them

with funds that were already taxed, they can be withdrawn at retirement tax free. This won’t reduce your 2016 taxable income, but compound interest is very powerful, especially for a child in their mid-20s or younger.

HOW SHOULD YOU PREPARE?

If you already use accounting software like QuickBooks, then you are off to a good start. Ensuring that all of your bank and credit card statements have been reconciled in your software is a great way to make sure you have accounted for all of your income and expenses. Of course this will not capture any expenses you may have paid in cash, so do your best to

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