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When most people think of tax time, they think of April 15. However, in reality, every day is tax day—April 15 is simply the day by which you must report your actions.
While our Save or Spend tax refund story contest is over for 2007 (read the winning stories), it is smart to start thinking ahead to 2008. For starters, you can estimate your taxes now by visiting www.irs.gov. This time of year, tax payers should also:
Research any tax law changes at www.irs.gov.
Keep organized records. On average, one-third of the nation’s taxpayers itemize their deductions. Costs for things like medical expenses and child care may be deductible, so save those receipts.
Make charitable donations. Most charitable gifts are tax-deductible if made to a qualified organization. But be sure your organization meets IRS guidelines as there may be different tax breaks when you donate certain types of assets to charity. Also be aware that under the new Pension Protection Act, donated items must be in good condition.
Check the status of your tax-free flexible spending account. If you have money in your account, you must use it by the end of the year.
Plan for retirement savings. Fortunately, you have until April to contribute to an Individual Retirement Plan (IRA). The maximum contribution for 2006 is $4,000.
Buy or sell stocks. Investors should meet with a tax advisor to determine whether to sell or purchase stocks.
Make any planned monetary gifts by the end of the year. For the 2006 tax year, taxpayers may make gifts of up to $12,000 per person and exclude the amount from the gift tax.
While income tax preparation may not qualify as a recreational hobby, a little planning throughout the year can save you time and money.
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