With tax season in full swing, we can all benefit from additional tips, knowledge, and insight to help improve the financial outcome of our tax returns. Whether you visit an accounting professional or calculate your own tax returns, this three month period can be a stressful time.
Joe Pigga, Joe Alu, and Mark Nerium, accounting experts from PA & K, LLP, of Kingston, PA, has tips to help get everyone ready for tax season.
- Organize your documents and information. Have all of your bank statements and basic accounting records prepared and finalized. A helpful way to stay organized and make sure you have all the needed information is to use debit and credit card records. These records give you a detailed account at the end of each year which will categorize all of your expenses into groups such as travel, supplies, mileage, etc.
- Being organized can help you accrue more benefits so you can increase your financial outcome. There are great advantages for homeowners or potential home owners; some being home equity loan interest deductions and points paid related to mortgage loans when purchasing a residence. Also, the IRA allows first time home buyers to withdraw up to $10,000 penalty free for their IRA to use for the purchase of a home. Individuals can also borrow up to $50,000 from their 401K for the purchase of a home.
- Review withholding allowances if you have a W-4. Making an IRA contribution is also a smart choice. With an IRA, you make contributions with money you may be able to deduct on your tax return. Any earnings can potentially grow tax-deferred until you withdraw them in retirement. You can still make an IRA contribution up to April 18, 2016 for the 2015 tax year deduction. It is also good to review your home expenditures because you might qualify for energy credits. This means you can get a credit of up to $500 for home insulation or other purchases that make your home more energy efficient. Also, consider increasing your 2016 401K so you will have more deduction going into next year. Lastly, review your charitable activities. This is important because you can take a deduction for mileage and receive 16 cents per mile for charitable activities.
There are many ways to optimize the outcome of your tax returns, so as April 18th quickly approaches us, be sure to be stay organized and educated of all possibilities! And for more information listen to our radio show at “Fidelity Bank – On Business.”