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Your 2015 Tax-Prep Road Map

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By Sheryl Nance-Nash

It's April 15, which means many of you are probably breathing a sigh of relief. You've either already filed your tax returns or are e-filing them as we speak -- and you're ready to take a break from thinking about taxes.

Not so fast.

This isn't a time to rest on your laurels. Instead, you should think about how you can avoid the last-minute scramble (or hefty tax bill) next year by getting organized in the months to come.

We consulted tax pros to weigh in on the small, quarterly to-dos you can consider tackling throughout the year ahead, so that come April 15, 2015, there may be less fear, less stress and hopefully fewer worries when it comes to doing your taxes.

Your Tax To-Dos: Second Quarter 2014

April 15: We know, we know -- tax day always seems to creep up on you. If you haven't yet filed, run to your local post office before it closes tonight, so that your snail mail returns for 2013 will be postmarked by April 15, or e-file them by midnight.

And if you've waited this long, you might as well squeeze in some last-minute traditional or Roth IRA contributions, if you can afford to -- April 15 is the last day to fund those retirement accounts and have it count toward your 2013 returns.
(For the 2013 tax year, the contribution limit for those under 50 is $5,500; if you're 50 or older, you can contribute up to $6,500.)

Aren't ready to send in your return? Consider filing for an extension using Form 4868 -- just remember that you still have to pay what you might owe, says Bob Wheeler, CPA and author of "The Money Nerve: Navigating the Emotions of Money." That's because the extension only affords you more time to file -- not more time to pay.

And if you're self-employed, you have to pay your estimated taxes for first-quarter 2014 by April 15 using the estimated tax payment voucher, also known as Form 1040-ES. Don't be late or you may be subject to underpayment interest, which is interest charged for not paying enough of what you owe, says Kerri Bogda, senior manager of Tax Services at the accounting firm ParenteBeard. "And you should consider mailing the voucher with a return receipt for proof of mailing," she adds.

May: By the end of this month, if not sooner, you've likely received your tax refund, assuming you were owed one. Based on that amount, consider whether you need to adjust your withholding. "You want to pay in just enough," says Bogda. "If you receive a refund, that means you withheld too much -- and gave the IRS a tax-free loan!" In general, your goal is to get as close to a zero refund as possible. A refund that comes in under $1,000 typically means that your withholding is on target.

Also take some time this month to get ahead on your record keeping. Create labeled folders for holding paperwork related to any tax-deductible expenses you make throughout the year. If you've already got an account set up in our Money Center, you can create a colored "Tax Deductible" folder to keep a digital record of your transactions. And if you're a premium member, you can upload PDFs of important tax documents -- like a copy of previous year's returns or W2s -- into the digital Doc Vault.

June: Consider spending this month going through your garage and closets to find what gently used items you can donate to charity. "I always advise my clients to take photographs of the donated items before and after they are bagged up," says David McKelvey, partner and CPA with the accounting firm Friedman. "While it is not required, the more support you have for the donation, the better it will be supported. Many charities do a poor job of providing detailed receipts."

And if you're self-employed, you must pay your second-quarter 2014 estimated taxes by June 16.

If you've been contemplating taking a continuing-ed course, this could be an ideal time to sign up for a class at your community college -- you could be eligible to receive a tax credit on tuition and fees.


Your Tax To-Dos: Third Quarter 2014

July: This is a good time to consider a midyear review of your savings and investments -- and to rebalance your portfolio, if needed. This way, you'll have a grasp of where you stand with regard to capital gains taxes by the end of the year.

Another helpful idea to consider? Make an appointment with a financial professional. "Each quarter, we request a realized gains and loss report from our client's stock broker, as well as an unrealized gain and loss report. This aids in conversations with our client, and may result in selling certain stock positions that will generate losses or offset the gains," McKelvey says. "This is a good practice to help clients understand what is happening in the brokerage accounts, and the potential tax implications."

August: You may be busy soaking up some much-needed rays during the dog days of summer, but if you asked for a tax-filing extension from the IRS, that deadline is just around the corner. So take advantage of what may be a slow time to finish gathering the forms or receipts you may need before the Oct. 15 filing deadline.

September: If you've been contemplating taking a continuing-ed course or brushing up on some professional skills, this could be an ideal time to sign up for a class at your community college -- you could be eligible to receive a tax credit on tuition and fees. Better yet, consider an income tax class, suggests Mark Steber, chief tax officer at Jackson Hewitt. "[Then] you will be more prepared for your taxes in 2015."

Self-employed? It's time for your third-quarter estimated tax payment for 2014: Get that in by Sept. 15.

And, finally, use this month to rethink your tax help. If you weren't thrilled with how your 2013 returns were handled, start interviewing new tax preparers now!

October: Next to April 15, Oct. 15 is the next most important tax date to know: It's the day of reckoning if you filed for an extension.

This is also the deadline for re-characterizing your Roth IRA conversion. In other words, if you converted money from a traditional IRA to a Roth IRA last year and paid taxes on that conversion in 2013, you can revert the conversion amount back to a traditional IRA -- enabling you to treat it like a traditional IRA contribution and thus getting a tax deduction on the amount.

The main reason for doing a recharacterization is because the market value of your IRA has dropped since the time you converted, which means that you paid taxes at the time of conversion on a larger amount than what's currently in the account. Recharacterizing and redoing the conversion this year will enable you to convert on a smaller dollar amount -- and potentially pay a smaller amount of tax -- at the time of conversion because the value of the account has dropped.

Mid- to late October is also when open enrollment starts at many companies. So use this as an opportunity to reassess your benefits -- and possibly find additional tax savings. If your company offers it, consider participating in Flexible Spending Accounts and other dependent benefit programs that offer tax breaks.

But keep in mind that most FSA accounts are "use it or lose it," so you'll only want to contribute an amount that you'll actually utilize throughout the year. HSAs, on the other hand, are not "use it or lose it," so they're a great option if you are part of a high-deductible health plan.

November: This month should be about Thanksgiving and year-end gift giving, such as any monetary gifts you've been meaning to make charities, as well as family members, before the end of the year. The annual gift exclusion for 2014 is $14,000 -- that's how much you can give to another person without paying a gift tax.

If your eyes have been glazing over news about taxes, do some research. There could be changes in 2015 deduction limits or retirement contributions.


December: The theme for the final month of the year: Pay, pay, pay. It's the last opportunity to make charitable contributions that could help lower your tax bill. (You can also do another portfolio review to see if any other holdings should be sold to offset gains.) And consider paying major medical bills, as well as property and state taxes, before the year is over.

Retirees over the age of 70½ should withdraw the minimum annual amount required by the government from their IRA by Dec. 31. "You'll want to make sure to calculate the amount to withdraw properly -- the value of all your IRAs as of December is the amount from which you will calculate your required minimum distribution, or RMD, for the subsequent year," says Bogda.

And don't forget to dust off your 2013 tax return, and watch for those final pay stubs to arrive in the mail, so you can get ready for your first-quarter tax prep.

Your Tax To-Dos: First Quarter 2015

January: This month, forget about the New Year's resolutions you aren't going to keep -- except for the one about getting organized. Start to gather and compile your tax documents, W-2s, 1099s, interest income statements and all of those receipts you've been diligently filing away throughout the year. "Verify your final pay stubs against your W-2s," says Steber. If there are any discrepancies, you'll want to know sooner than later.

If your eyes have been glazing over any news about taxes over the past six months or so, do some research to see what's happened in the tax world. There could be changes in 2015 deduction limits or retirement contributions that you aren't aware of.

Also research how big life changes -- like a birth or marriage -- may impact your taxes and potential deductions over the coming year, and set up a new Tax Deductions 2015 folder in your Money Center.

And if you're self-employed, you guessed it -- it's time for your fourth-quarter 2014 estimated tax payments, due on Jan. 15.

February: If you haven't already, schedule an appointment with your tax preparer early in the month because they can get busy fast. You want to see your accountant when he has the time to look at everything thoroughly -- as opposed to when he's in the thick of the last-minute filing rush.

March: Prove that all of your planning paid off, and file your taxes in March. Then, on April 15, you should be able to sit back and relax before getting ready to hit the repeat button.


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