Six Tax Resolutions for the New Year
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We’re three weeks into the New Year; have you stuck with your resolutions? We usually intend to be good, and we give ourselves optimistic goals. But we often get too ambitious and sometimes even end up abandoning our good intentions once we miss out on any part of our targets or goals, including those related to our financial and tax-related resolutions.
Here are six tips to help you stay on track and achieve your tax resolutions. Remember that these are resolutions for the entire year, not just January. Even if you fail to meet a goal or target or you slack off for a month or two, try to regain focus and get back on track for the rest of the year.
1) Let this be the year you take advantage of every tax benefit available. There are lots of tax credits and tax deductions you may have overlooked in the past, so this year, don’t leave any money on the table. Resolve to schedule two one-hour meetings with a tax professional during the year. Find Enrolled Agents at www.naea.org, CPAs at www.cpadirectory.com, and all tax professionals at www.ptindirectory.com.
2) Keep records of all your financial activities, including all receipts, throughout the year. It’s OK to scan them; as long as the scan is clean and readable, paper records are unnecessary. However, if you still prefer paper, you can pick up an inexpensive expandable file at any office supply store to stash your records.
3) Keep a detailed time diary of your business and investment-related activities. Track time on paper using an appointment book (TaxMama uses an At-A-Glance book with a full page for each day), the Tax MiniMiser, or a regular monthly calendar. If you’re attached to your smartphone, you can also keep a detailed log using an app.
4) Using the same tools as above, keep detailed records of your driving and travels. There are hefty deductions available for driving and for your lodging and meals when you are traveling, but the only way to maximize those deductions is to keep details about where you were and when. When it comes to vehicle expenses, you need both the business miles and the total miles driven on the vehicle for the year.
5) Keep track of your credit status. With all the identity theft issues showing up in people’s tax files, the first warning you might have is in your credit report. In addition, keeping your FICO scores high can reduce your interest costs, thereby cutting your monthly payments.
6) Most importantly, have fun! Remember, life isn’t only about working, budgeting, and record-keeping. It’s also about laughing, smiling, getting outside, being with people you love, and enjoying life. Put specific days and times on your calendar for yourself, for family time, for friend time, and for trips. By scheduling these times, you won’t forget to indulge. And set aside some money each week instead of blowing it on an impulse buy. (Keep an envelope handy in which to drop the cash.) Just one $5 or $10 bill each week can add up to hundreds of dollars to help cover a special trip you didn’t think you could afford.
Eva Rosenberg, EA is the publisher of TaxMama.com , where your tax questions are answered. Eva is the author of several books and ebooks, including the new edition of Small Business Taxes Made Easy. Eva teaches a tax pro course at IRSExams.com and tax courses you might enjoy at http://www.cpelink.com/teamtaxmama.
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