April 15th has come and gone. Many of us are still wiping the sweat off of our brows from all the frantic activities of saving some tax and filing our returns. And many of us have made a new new-year resolution—one that we make every year around this time—to never leave our tax planning and filing for the last minute. If only we could hold ourselves to that one.
But, for those who are more determined than last year to take this latest resolution more seriously, here are some tips on better tax planning for the next year from Adam Ginsberg, one of the leading coaches on wealth building and management.
Tax Tip #1
Itemized Tax Deductions Vs Standard Tax Deductions
The 2009 IRS data shows that 45 million Americans claimed more than $1 trillion in tax deductions by itemizing them compared to the 92 million tax payers who only claimed $700 million by way of standardized deductions. Going by these statistics, it does not take a math genius to figure out that itemized deductions are better for your financial health. This should be incentive enough to get you started on next year’s tax planning early. Adam Ginsberg suggests that you consult a tax accountant as soon as you can and understand the various heads that you can itemize your deductions under. Next, you keep track of any expenses that you incur under these heads and bring them to your accountant before you file your returns next year. Be sure to pat yourself on the back when you compare your tax savings on itemized deductions with your standard deductions that you claimed this year.
Make Money on Your Tax Money
If you are already saving some dollars on your taxes by filing for itemized deductions, you could make some more money still by Adam Ginsberg suggests that you bring out your calculator and figure out how much tax will you owe Uncle Sam next year by taking your current tax payout and adding what you estimate will your tax grow by in the coming year (forecast your income growth etc.). Now divide that figure by 12 and what you get is your monthly tax liability. Now, instead of foraging into your savings, taking a loan, or using your credit card to pay the tax collector together at the end of the year, you could put aside the monthly installment of your estimated tax liability into a short-term deposit or look for other interest-earning venues where your tax money would not only be safe, but will also earn interest for you the entire year. So, not only do you earn interest on your tax money, but also save interest on a possible loan or credit card payment of your tax.
While these two tips should be motivation enough to make an appointment with your tax accountant today, we would love to hear your thoughts on why we should start our tax planning early this year. Leave a feedback comment or drop us a line.
Adam Ginsberg wants to help you to save money by educating you on taxes, which would help you have a financially sound 2013. Read more of Adam Ginsberg Resources for other tips.