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What to Do Now That Tax Season is Over
While this year’s tax season is now safely in our rearview mirror, that doesn’t mean that your financial responsibilities are over. Preparing for your taxes should be something that you integrate into your routine year-round. Doing this will help you avoid stress and reduce your risk of an audit in coming years. Since you’ve made the deadline, you can take some time to relax, but taking preliminary action now is the best way to stay ready for anything. To help secure your long-term financial plan, here’s what to do now that tax season is over.
1. Check and Verify Your Account Information
The IRS allows you to access your online account to check on the latest information that’s available regarding your federal taxes. Take the time to utilize this tool and view your account information. You can review your most recent tax return and make sure that all of your personal information is accurate and reflective of your current financial standings. If your income has changed, this is where you can make adjustments. This is also the perfect opportunity to check your Individual Tax Identification Number (ITIN) to make sure that it’s valid for next year.
2. Gather Any Necessary Tax Records
Between active tax seasons is a great time to get organized. Doing so ahead of time and keeping up with your organization throughout the year makes tax season much easier and far less stressful. It also gives you an opportunity to check for overlooked deductions or even tax credits. Keep all of your tax records in one place and consider a filing system to help keep track of employees, business-related expenses, and more.
3. Make Contributions to an IRA
With the stress of tax season gone, you can focus on how to reduce your taxable income and maximize your tax return. One of the best ways to do this is by making contributions to an IRA. As an added bonus, IRA contributions will help you plan for retirement and accrue long-term wealth. Remember, a traditional IRA will reduce your taxable income, but you will have to pay taxes on it when you take the money out. A Roth IRA will not affect your taxes now, but the money can be withdrawn after retirement tax-free.
4. Increase Your Energy Efficiency
Homes and businesses that make certain qualified energy-saving improvements can claim an environmental tax credit. If you need to make any upgrades, consider doing them now. You can claim a tax credit up to 26% of the costs through 2022 if they meet the federal energy-efficiency standards outlined here.
5. Review Investments
Now is also a great time to work with a financial advisor to review your investments and diversify your portfolio. If you’ve got investments with large losses, you may be able to sell them to offset capital gains. This can get complicated depending on your portfolio standings and your calculated gains and losses, so don’t be afraid to reach out for professional help. It’s an investment that will pay off over the years to come. You can offset your taxable income with no more than $3,000 in excess loss per year.
6. Reevaluate Charitable Contributions
Many of us make charitable contributions during tax season to help lower our taxable income and offset our tax bill. While end of the year donations are great, consider making them throughout the year as well. This can help spread the financial commitment out and gives you time to thoroughly evaluate who you decide to give your money to. Consider the values that you and your business stand behind and do some research to find a charity that upholds those values. Since you have plenty of time to make a donation, you won’t feel rushed into making a decision. Make sure that you receive a letter of acknowledgement for your contributions from the charity.
If you have an old car, you can use that as a donation if that charity uses it during tax-exempt work. The car’s deduction will be at fair market value and accompanied by the proper paperwork.
7. Perform an Audit
After tax season is over, you may want to perform an internal audit. This allows you to determine whether or not you’ll need to make any updates or changes for the next year. Since the recent tax reforms, this also gives you a chance to make sure that everything’s up to standards and that you’re withholding the correct amount.
8. Schedule Your Mid-Year Check-In
While tax season is over, it doesn’t mean that you can’t be proactive. Schedule a mid-year check in with a certified public accountant at Del Real Tax Group to make sure that you’re working towards your financial goals all year long. During this mid-year check in, you’ll update any changes, review your business and personal expenses, review accounts receivable, track estimated payments, plan for savings, review investments, maximize credits and deductions, and more. You’ll get a chance to revisit your short- and long-term goals to make sure that you’re working towards them throughout the fiscal year and beyond. At your mid-year check-in, your CPA will also discuss any changes to the tax law that you need to be aware of. Remember, the best way to be prepared for what’s to come is to stay proactive. Schedule your mid-year check-in today.
9. Relax and Unwind
Most importantly, now that tax season is over it’s time to relax and unwind. Enjoy some time off from thinking about taxes and schedule a vacation. While you might not think this is a great time to do so, time away from the office will help you recharge and increase your productivity when you return. If you’re unable to get away, at least schedule a spa day or a short weekend staycation. Having a good work/life balance is the best way to make sure that you’re setting yourself up for success in business.
Another great way to relax and unwind is to analyze your routine and think about making a few healthy changes. If you don’t exercise enough, schedule some time in the mornings or night to get to the gym or take a walk. Then, revitalize your workspace in a way that can impact your attitude and overall wellbeing. Focus on improving organization and maybe adding a few plants to help boost productivity. Now is the best time to make changes that can help you relax and unwind throughout the rest of the year.
Small businesses overpay in their taxes every year. To make sure that you’re keeping more of your hard-earned money in your pocket, tax planning is essential. Even though tax season is over, the accountants at Del Real Tax Group are still hard at work maximizing their clients tax benefits. Del Real Tax is one of the select companies fortunate enough to have an experienced certified tax coach available to our clientele. We specialize in helping small businesses maximize profits and each of our accountants work to give you personalized service and attention. Our primary goal is to help you save thousands of dollars in taxes a year! 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