Most people have filed their 2011 Income Tax Returns by now; therefore planning for 2012 should start immediately. Here are eight things the IRS suggests that you should do.
Adjust your withholding. Don’t provide the IRS with an interest free loan. If you had a large overpayment, now is a good time to review your withholding and make adjustments. The reduction in withholding improves your cash flow for the entire year. If you had a substantial underpayment, make adjustments so that interest and penalties are not assessed.
Store your returns and supporting documents in a safe place. If you receive an IRS Notice, or are examined, you will need to access the information quickly. You also need the information to prepare the 2012 income tax returns.
Organize you record keeping. Establish a central location where everyone in your household can place tax-related records all year long.
Review your payroll earnings statement. Make sure the proper withholdings are occurring and that your retirement plan contributions, medical insurance premiums, and flexible spending account contributions are as desired.
Shop for a tax professional early in the year. If you desire to use a professional to plan, strategize, and make financial planning decisions throughout the year, then search now. Choose a professional wisely. You are ultimately responsible for the accuracy of your returns.
Prepare to itemize deductions. If your expenses typically fall just below the amount to make itemizing advantageous, planning to bundle deductions into 2012 may be beneficial.
Strategize tuition payments. The American Opportunity Tax Credit will expire after 2012; therefore it may be advantageous to pay 2013 tuition in 2012.
Keep up with tax law changes. Meet with your tax professional during the year to discuss changes in the law and to discuss changes in your personal circumstances.
