by William (Casey) Nowicki
Five things to keep in mind as tax season approaches
Be wary of tax scams. Scammers posing as IRS or US Treasury Department agents claim that you have a delinquent account, threatening that it needs to be settled immediately or you will be arrested. The IRS does not make personal phone calls unless you have provided the Service with you phone number while dealing with them on another matter. If you are uncertain whether you have an issue, contact your CPA, tax preparer, attorney or other representative and ask for help.
The Affordable Care Act has reporting requirements concerning health insurance coverages on your individual income tax returns. Your insurer will be sending you form 1095 which documents the health insurance premiums paid and the months you were covered. Provide form 1095 to your tax preparer for 2015 tax returns.
Be organized and prepared. Tax reporting documentation begins filtering in through the mail in early January. W-2s, 1099s for interest, dividends, and capital gains, as well as, for pension and IRA distributions (as well as the new ACA form 1095, discussed above) are some of the more common forms you may receive. Keep anything that comes in the mail that states “Important Tax Reporting Documentation.” Set up a file and simply deposit these items in it as they arrive.
Make sure you take the time to itemize and add up your medical deductions and your non-cash charitable contributions, such as to Goodwill and Salvation Army. These items often are larger amounts than you realize and could provide significant deductions to lower your tax obligation.
Don’t procrastinate. Make an appointment with your tax preparer or set aside the time you need to prepare your returns early. April 15 comes quickly. Prepare your tax return and file it if you have a refund coming or be aware that a balance is due, allowing time to make provisions on when and how you will pay that balance.
Suggested resolutions for 2016
Take the time to understand your finances and your tax returns. Talk with your CPA or tax preparer to make sure you know the components of your income and the deductions available to you, so that you aren’t paying more than your fair share. Your employer may offer many tax advantaged benefits such as 401(k) plans, flexible spending accounts and even medical insurance premiums, that can be treated as pre-tax items, reducing your taxable income. If you have not begun receiving Social Security benefits, take the time to research the available options to help you maximize your overall benefits.
Organize your financial affairs. Make sure you have your will, powers of attorney, trust agreements and beneficiary designations in order. Things change and we often forget to update these documents to account for those changes.
Create a monthly budget to
monitor your success. Sometimes the process of working through the budget will open your eyes.
William (Casey) Nowicki, CPA is a principal at VZN Group, LLC Certified Public Accountants 5900 Renaissance Place, Toledo.
(419) 882-1886 | vzncpa.com