You may one of the lucky ones to come out on top this tax season, but as you will likely agree, it does not mean that you should rest on your laurels. Instead, use the experience gained during this tax season as a guide for the things that you can do better for next tax season.
The following are some tips that can help to ensure you have a smooth 2007 tax season:

  • Design a filing system for all your receipts and tax documents. The shoebox system is not the most effective, but it can be a good back up for information you enter into a database. Your shoebox system can be as simple as maintaining separate envelopes for different types of receipts, e.g. medical, educational, travel, charitable donations and job-hunting expenses. Before you file those receipts away, be sure to enter the amount into your database. If you are not ready to invest in a ready-made accounting software, and you are not spreadsheet savvy, ask your tax preparer to design a spreadsheet file for you to help keep you organized. Designing such a program takes no more than 10 minutes for someone who is familiar with the process.
  • If you received a large tax-refund, consider decreasing your tax withholding percentage, which would increase the amount you receive on your paycheck. The increased take-home pay can be routed to your savings account, including retirement accounts, as an automatic deposit. Many employer and plan administrator websites host calculators that can help you determine how an increase in withholding tax would affect your take-home pay.
  • If you owed income taxes, consider whether you need to pay estimated taxes during the year so as to avoid any penalties that may be owed for underpayment of taxes. See IRS Publication 505 at www.irs.gov for assistance with determining whether you need to pay higher estimated taxes.
  • If you missed the deadline for liquidating stocks for which you wanted to write off losses for last year, make a note to yourself to sell those stocks before year-end. (To read more, see How do I avoid paying excess taxes on securities I have sold?)

Getting an early start will help you to avoid year-end and tax-filing period rush, and it will help you keep on track with your financial goals throughout the year.

If you feel you will be unable to file your tax return by the deadline, see Get A Six-Month Tax Extension.

Question answered by Denise Appleby, CISP, CRC, CRPS, CRSP, APA

  1. Do tax brackets include Social Security?

    A portion of your Social Security benefits may be subject to federal taxation using tax brackets. Your tax bracket is determined ... Read Full Answer >>
  2. Do 401k contributions reduce AGI and/or MAGI?

    Traditional 401(k) contributions effectively reduce both adjusted gross income (AGI) and modified adjusted gross income (MAGI). ... Read Full Answer >>
  3. Are IRS audits random?

    While the U.S. Internal Revenue Service (IRS) conducts some of its tax audits using random selection based on a statistical ... Read Full Answer >>
  4. Does the IRS report to credit bureaus?

    The Internal Revenue Service (IRS) doesn't report overdue tax debt to credit bureaus. Federal law protects the privacy of ... Read Full Answer >>
  5. Does the IRS charge interest on penalties?

    The Internal Revenue Service (IRS) charges interest on any overdue taxes owed, but it does not charge interest on penalties. ... Read Full Answer >>
  6. Can the IRS take your house?

    The Internal Revenue Service (IRS) is an agency in the United States that enforces the collection of personal and corporate ... Read Full Answer >>
Related Articles
  1. Taxes

    The Purpose Of The W-9 Form

    The W-9 form provides key data your clients need if you're an independent contractor. Just be sure you're not really an employee who should fill out a W-4.
  2. Taxes

    5 States Without Sales Tax

    Learn about the five states that do not charge sales taxes and about other taxes the states levy instead in order to generate revenue.
  3. Taxes

    10 Money-Saving Year-End Tax Tips

    Getting organized well before the deadline will curb your frustration and your tax liability.
  4. Taxes

    End-of-the-Year Checklist to Save on Income Taxes

    From grouping related expenses to factoring in the alternative minimum tax, here are some things you need to keep in mind when doing tax planning.
  5. Taxes

    Before You Visit Your Tax Preparer: Do This

    The earlier you start preparing your tax records and documents, the more likely you are to have a smooth tax return experience – and all the tax benefits you're due.
  6. Retirement

    How Yearly Taxes on 401(k) Accounts Work

    Learn how your contributions to traditional or Roth 401(k) accounts are taxed, either in the year of contributions or at withdrawal, depending on the type.
  7. Taxes

    When You Should Change Your Withholding Tax

    Paying attention to your W-4 form, and making adjustments when necessary, is an important way to make sure your tax withholdings are correct.
  8. Taxes

    Which Receipts Save Big Money at Tax Time

    Don't wait to April 13th to set up a smart receipt-filing system. These 7 categories could save you some significant money.
  9. Savings

    7 Easy Steps to Negotiating a Raise

    Salary negotiations aren't easy, but even if your company is on a tight budget, you can still ask for more.
  10. Retirement

    Can Your 401(k) Impact Your Social Security Benefits?

    Find out why income from a 401(k) does not affect the amount of your Social Security benefits, but how it can impact your annual tax bill if you earn too much.
  1. Taxes

    An involuntary fee levied on corporations or individuals that ...
  2. W-2 Form

    The W-2 form reports an employee's annual wages and the amount ...
  3. Sales Tax

    A consumption tax imposed by the government on the sale of goods ...
  4. Duty Free

    Goods that international travelers can purchase without paying ...
  5. Tax Deductible Interest

    A borrowing expense that a taxpayer can claim on a federal or ...
  6. Deferred Tax Asset

    A deferred tax asset is an asset on a company's balance sheet ...

You May Also Like

Trading Center