5 Moves to Make Before Tax Time

Written by Cathy on February 10, 2014

taxtime14

April 15 - "Tax Time" - is rapidly approaching, and there are a few things you can do to help yourself this year:

1. Invest in an IRA - You have until April 15 to max out your IRA investment for the previous year. That means you have until April 15, 2014 to invest up to $5,500 and have that amount applied toward your 2013 contribution. Just be sure to let your investment company know that the contribution should be applied toward 2013, or they can apply toward your 2014 contribution. If you have a Roth IRA, you'll still have to pay income tax on your contribution but your investment will grow tax-free, and you'll still be able to invest the maximum in 2014. If you have a traditional IRA, you'll save yourself from having to pay income tax on your 2013 contribution.

2. Invest in a Coverdell Education Savings Account - Coverdell Education Savings Accounts can be a great way to save money not just for college, but for your child's primary and secondary education as well. Like IRAs, you have until April 15 to max out your Coverdell investment for the previous year, up to the maximum of $2,000. Contributions to Coverdell accounts are treated much like Roth IRA contributions, in that you will have to pay income tax on your contribution but your investment will grow tax-free. And you'll still be able to invest another $2,000 in 2014.

3. Learn about the new simplified home office deduction - If you have a business that you work on at home, you may be able to claim a home office deduction, which has been simplified in 2013 for many taxpayers. Instead of filling out the complicated Form 8829, you may be able to use a worksheet in the Schedule C booklet instead.

4. Protect yourself from ID theft - Tax-time identification theft is a growing problem, so be sure to safeguard your information during this tax season. Most documents sent in the mail no longer contain your full social security number, but you'll still need to provide that number at certain times. Use only reputable tax professionals or tax preparation software, and don't send sensitive information in an unsecured email.

5. Decide what you'll do with a refund or how you'll pay if you owe - You'll get the most out of your money by having a plan in place for what's due or what's returned to you when you file your taxes. If you owe more taxes, now's the time to figure out where the money will come from, so you don't have to take out a loan to pay the IRS. On the other hand, if you're expecting a refund, decide now whether you will save it or spend it purposefully, so that you don't end up spending it frivolously.

Posted Under: Savings
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About Cathy

Cathy is the founder of Chief Family Officer, where you can get daily updates on the hottest deals, and tips to achieve financial freedom and family bliss.


Feb10

taxtime14

April 15 - "Tax Time" - is rapidly approaching, and there are a few things you can do to help yourself this year:

1. Invest in an IRA - You have until April 15 to max out your IRA investment for the previous year. That means you have until April 15, 2014 to invest up to $5,500 and have that amount applied toward your 2013 contribution. Just be sure to let your investment company know that the contribution should be applied toward 2013, or they can apply toward your 2014 contribution. If you have a Roth IRA, you'll still have to pay income tax on your contribution but your investment will grow tax-free, and you'll still be able to invest the maximum in 2014. If you have a traditional IRA, you'll save yourself from having to pay income tax on your 2013 contribution.

2. Invest in a Coverdell Education Savings Account - Coverdell Education Savings Accounts can be a great way to save money not just for college, but for your child's primary and secondary education as well. Like IRAs, you have until April 15 to max out your Coverdell investment for the previous year, up to the maximum of $2,000. Contributions to Coverdell accounts are treated much like Roth IRA contributions, in that you will have to pay income tax on your contribution but your investment will grow tax-free. And you'll still be able to invest another $2,000 in 2014.

3. Learn about the new simplified home office deduction - If you have a business that you work on at home, you may be able to claim a home office deduction, which has been simplified in 2013 for many taxpayers. Instead of filling out the complicated Form 8829, you may be able to use a worksheet in the Schedule C booklet instead.

4. Protect yourself from ID theft - Tax-time identification theft is a growing problem, so be sure to safeguard your information during this tax season. Most documents sent in the mail no longer contain your full social security number, but you'll still need to provide that number at certain times. Use only reputable tax professionals or tax preparation software, and don't send sensitive information in an unsecured email.

5. Decide what you'll do with a refund or how you'll pay if you owe - You'll get the most out of your money by having a plan in place for what's due or what's returned to you when you file your taxes. If you owe more taxes, now's the time to figure out where the money will come from, so you don't have to take out a loan to pay the IRS. On the other hand, if you're expecting a refund, decide now whether you will save it or spend it purposefully, so that you don't end up spending it frivolously.

About Cathy
Cathy is the founder of Chief Family Officer, where you can get daily updates on the hottest deals, and tips to achieve financial freedom and family bliss.