SPECIAL ARTICLE BROUGHT TO YOU BY COOK MARTIN POULSON CPA
By Erik Hatch, Cook Martin Poulson
There are few things as frustrating as expecting a tax refund and finding out that you owe the IRS A LOT of money. As a CPA, I make a lot of calls to clients informing them on the amount of tax they owe. Almost every time (once my client recovers from the shocking news) they ask two questions: how did this happen and are there any other deductions I can take?
The specific answers to both of those questions are as unique as each client, but the reality is that most taxpayers (with a little foresight and tax planning) can reduce or eliminate the surprise of a tax bill.
So, in preparation for the upcoming tax season might I suggest a few tips:
- Get organized – Gather your tax documents (e.g. W-2s, 1098s, 1099s, etc.) Most of the documents will be available by the end of January.
- Collect receipts for itemized deductions, specifically medical expenses, charitable contributions, state taxes, and mortgage interest.
- Pull out a copy of last year’s tax return to make sure that you have all of your documents.
- Find tax software or a reputable tax professional to assist you in your tax filing. If you would like to prepare your own return, the IRS on their Free File site has a list of software providers. If you are looking for a tax professional The Utah Association of Certified Public Accountants (UACPA), is a great source to find a listing of qualified professionals.
Cook Martin Poulson is a great local CPA firm that has been helping individuals and businesses with their taxes for over 40 years. They can be found at cookmartin.com.
Once you have filed your tax return and are looking for ways to reduce your tax exposure, I would suggest that you examine the following:
• Am I contributing to a 401k? Am I maximizing contributions?
• Should I contribute to a Roth or traditional retirement plan?
• Do I qualify to Contribute to a Health Savings Account (HSA)? Am I maximizing contributions to my HSA?
• What was my tax from last year?
• Is my income going to differ significantly from last year?
• Are the federal and state withholdings from my paycheck covering the tax I owe?
• Should I make more charitable contributions?
• Would paying charity every other year or batching my contributions change my tax?
• Can I prepay state income or property taxes?
• Do I have investments with losses that I can use to offset other gains?
If you are planning on preparing your own taxes or looking to hire a professional taking time to organize your records will save you time and money. Additionally, reviewing your taxes and taking a critical look at your financial position will help you to take control of life and plan for the future.