Plan Ahead for an Easier Tax Time

These ideas may make tax time simpler and may even help you pay less, so talk to an expert.

Next April 15 is almost a year away, but it’s not too soon to think about ways you can save on this year’s taxes.

In fact, now is the only time you can make a real difference in your tax liability through planning, says Dominique Molina, CPA, president of the American Institute of Certified Tax Coaches and co-author of the book Breaking the Tax Code.

“The number-one mistake I see people making is that they fail to plan,” she says. “And, as the old saying goes, if you fail to plan you plan to fail.”

Molina suggests talking to your tax advisor now, to make sure you’re aware of every deduction or credit that’s available to you.

Medical expenses: You may be able to deduct them, but only if they exceed 7.5 percent of your adjusted gross income (AGI). You might get a bigger bang for your buck by looking at a medical expense reimbursement plan, such as a Flexible Spending Account (FSA) or Health Savings Account (HSA).

Retirement planning: According to Molina, this is one of the most misunderstood areas of tax planning. Establishing a retirement account is important, but so is choosing the best one for you. For example, if you think your tax rate may be higher when you retire, a Roth IRA might be a wise choice.

Charitable contributions: You may be able to deduct the thrift store value of donations, but only those made to 501(c)(3) organizations.

Energy efficiency credits: You may be able to claim a 30 percent credit for the cost of qualified energy efficiency improvements such as insulation, heating/cooling systems, exterior windows and doors or roofs, up to $1,500.

For all the above and other tax issues, consult with your tax advisor. Neither the company nor its representatives give legal or tax advice. Please consult your attorney or tax advisor for answers to specific questions.