- Days left

5 Tips for Preparing Your 2014 Taxes

Worried couple working on personal finances
Getty Images
By Bonnie Lee

Tax planning very rarely makes it on people's new year's resolution lists. But perhaps 2014 should be the year you vow to achieve a greater level of understanding about your taxes and to properly organize and plan for your liability.

Not only would this pledge make your life easier come tax season, it could also end up keeping more money in your bank account.

Here are some tips to get rolling on fulfilling this resolution:

Set up your 2014 tax file. This could be an electronic file in which you scan documents and transactions throughout the year that will affect your tax return, or a folder or bin that holds the information.

The beauty of an electronic file is that at tax time you can simply e-mail it to your tax professional, who will likely also maintain the file in the event of an audit. Just make sure you have adequate back up of your data in case something goes wrong. Adding notes on the tax documents to aid your tax pro in understanding the transaction can help the filing process.

Examples of documents to store for tax purposes include: W-2s, 1099s, K-1s, escrow papers for purchase, sale of refinance of properties, receipts for property tax and vehicle registration fees, receipts for other tax deductible items, and acknowledgement letters from donations made to qualified nonprofit organizations.

Schedule a mid-year tax planning appointment if your financial situation will change this year from last year. If you plan to get married or divorced, buy or sell a home, start a family, or experience any other financially-altering event in 2014, it's a good idea to meet with a professional to do some tax planning. However, I advise against scheduling a planning session at the height of tax season -- your tax pro will likely get hysterical.

Make plans to fund your retirement plan. If you have a retirement plan at work, check to see if you qualify to contribute more to the plan and to make sure you are taking advantage of an employer match.

If you have no retirement plan in place, open an IRA, Roth IRA or other such plan.
Your bank or investment house will be able to help you decide between various instruments to find one that best fits your financial situation. A tax professional can also weigh in on which type of savings vehicle would work best for a particular situation. This will not only reduce your current year tax liability, but it will help provide for your future. With so much uncertainty surrounding the viability of Social Security and Medicare (which experienced cuts this past year), it is important to look out for yourself.

Log estimated tax payments, log the dates and amounts into your calendar. The IRS penalizes those who do not prepay their income tax liabilities in a timely manner. The dates for the four installments of your 2014 estimates for individuals filing on a calendar year basis are: April 15, June 16, Sept. 15, and Jan. 15, 2015.

Follow tax legislation news. Tax law changes rapidly and what you may think is a valuable deduction or credit for your tax return may have been obliterated by a congressional whim. I've encountered many disappointed clients who were counting on a credit or deduction that no longer exists.

Best wishes to you all for a happy, healthy, prosperous and tax-savvy new year!

Increase your money and finance knowledge from home

Understanding Credit Scores

Credit scores matter -- learn how to improve your score.

View Course »

Intro to different retirement accounts

What does it mean to have a 401(k)? IRA?

View Course »

TurboTax Articles

Cities with the Lowest Tax Rates

The total amount of tax you pay reaches far beyond what you owe the federal government. Depending on where you live, most likely you're required to pay additional taxes, including property and sales tax. The disparity between the amount of tax you pay in a low-tax city and that in a high-tax city can be dramatic. Living in any of these 10 cities could save you a bundle, although the exact amount may fluctuate based on your income and lifestyle choices.

Cities with the Highest Tax Rates

Much ado is made in the press about federal tax brackets, but cities can carry a tax bite of their own. Even if you live in a state that has no income tax, your city may levy a variety of taxes that could eat away the entire benefit of living in an income tax-free state, including property taxes, sales taxes and auto taxes. Consider all the costs before you move to one of these cities, and understand that rates may change based on your family's income level.

Great Ways to Get Charitable Tax Deductions

Generally, when you give money to a charity, you can use the amount of that donation as a deduction on your tax return. However, not all charities qualify as tax-deductible organizations. While there are many types of charities, they must all meet certain criteria to be classified by the IRS as tax-deductible organizations. There are legitimate tax-deductible organizations in many popular categories, such as those listed below.

A Freelancer's Guide to Taxes

Freelancing certainly has its benefits, but it can result in a few complications come tax time. The Internal Revenue Service considers freelancers to be self-employed, so if you earn income as a freelancer you must file your taxes as a business owner. While you can take additional deductions if you are self-employed, you'll also face additional taxes in the form of the self-employment tax. Here are things to consider as a freelancer when filing your taxes.

Tax Deductions for Voluntary Interest Payments on Student Loans

Most taxpayers who pay interest on student loans can take a tax deduction for the expense ? and you can do this regardless of whether you itemize tax deductions on your return. The rules for claiming the deduction are the same whether the interest payments were required or voluntary.

Add a Comment

*0 / 3000 Character Maximum