9 Tax Moves Before Welcoming In The New Year

The season of cheer can make a procrastinator out of you as far as taking care of tax planning and finances is concerned. As January 2008 dawns it will be time to take care of IRS files and run helter skelter to complete paperwork and investments.

So before you get ready to splurge on Christmas and New Year’s Eve celebrations take care of the year –end financial planning and housekeeping.

1. Run a glance through your accounting files and check if investments and the financial planning for tax have gone smoothly or need tweaking.

2. Think about making changes in the health-care coverage. Find out about open benefit enrollments. It is possible to secure savings of 25% on dependant care and out-of-pocket medical expenses through FSAs or flexible spending accounts. These have two options medical and dependant care. FSA accounts are through pre-tax dollars and this account will cover doctor’s visits, prescriptions, orthodontics, acupuncture, psychotherapy and more. So think about joining the FSA program and you will save USD 420 annually from taxes for contributing USD 1200 in medical/dependant care FSA.

3. Try and minimize tax and instead of spending during the festive season excessively work out ways in which you can minimize tax. Check the employer sponsored retirement fund and see whether you have set aside USD 15,500 (20500 if you are 50 years old and above). Consider increasing your retirement savings and reducing the tax burden. The deadline for work retirement funds is Dec 31, 2007.

4. Check out the company’s 401k roll over fund. Put dollars into the fund instead of paying tax. Weigh the pros and cons of the savings.

5. Rework the tax saving plans. And jot down simple ways of reducing tax. Think about deferring payments by a month. And avoid the alternative minimum tax or AMT.

6. Try not to over pay the IRS. Check the withholdings of Form W-4 . There are websites like the IRS site or paycheckcity.com where you can check. Think of investing in S&P or a high-yield savings scheme.

7. The IRS is helping those who have suffered at the swing of stocks. You can save on taxes owed on investments by offsetting with capital losses on stocks. So check out where you may be eligible for a tax break. So rework your portfolio to your benefit.

8. Sit down and think about saving tax by investing money that you will splurge in the festive season such that you will find relief come March. check out your finances and plan for taxes.

9. Take a few hours off from celebrations to get tax papers in order and do final tweaks to the investments and tax payments.

It pays to be ready for tax season. The World Wide Web is replete with advice and tips but always check out facts with reliable websites before actioning any adjustments. Usher in the New Year as an organized person.