Taxes are filed, now what?

THE WOODLANDS, Texas -- Now that tax season is officially over, one might likely do nothing until next year’s tax season. Instead of sitting idly by, there are seven things that you can do today to make next tax season easier on them and their accountant, according to Paul Oman, CPA and partner with Oman, Berry & Associates, PLLC in The Woodlands.

Save your receipts.

Think ahead and set aside receipts for all out-of-pocket medical expenses not covered by insurance such as prescriptions, co-payments or eyeglasses and contacts. These receipts can be used for deduction purposes. Make sure the original receipt is retained and document the charge. File it away in a folder designated solely for tax receipts.

Double-check what your employer offers.

Check with one's human resources department to see if their employer offers a Flexible Savings Accounts (FSA) for medical and childcare expenses. If these expenses will likely be incurred, one's federal taxable wages will be reduced by the amount you contribute.

Contribute, contribute, and contribute!

If a tax deferred account is offered, contribute as much as possible. Not sure what a tax-deferred account is? It is a retirement savings account that qualifies for special income tax treatment. All tax deferred accounts start with a four such as a 401k or 414h. According to Oman, the contributions that one makes to the plan and subsequent appreciation of the assets are not taxed until a later time, ideally at retirement when one's income and tax rate are lower. Not only will your contribution reduce federal taxable wages, sometimes companies will match one's contribution, which is like getting free money. Remember, said Oman, it’s a lot easier to pay one's self through the plan than to pay the government.

Track expenses.

If one is self-employed, they will need to keep track of miles travelled to see clients, tolls paid and any other expenses incurred in order to do their job, including but not limited to, cell phone records, internet access, paper, toner/ink, business cards and advertising for your business.

Review the W-4.

If one owed on a prior year return, and their situation will be similar in the upcoming year, they may want to adjust their W-4. One can have additional monies taken out of paycheck to account for potential shortfall. Additionally, if they are self-employed and know they need to make quarterly estimates, register the bank account with the government at EFTPS.com. They can make payments online and save postage costs.

Reassess finances.

If one needs access to cash and has to tap into their 401k, review the plan description to see if it offers loans. These loans are paid back over a specific period of time, are not taxable unless one leaves their employer and does not pay it back in full and is not subject to an early withdrawal penalty of 10 percent.

Oman stressed that a 401k plan is intended to be a long-term retirement savings plan. However, the government recognizes that many employees would be reluctant to save in a 401(k) without the possibility of getting their money out before retirement. So, employers are allowed to decide whether or not to offer a loan feature and as a result, loans are not universally offered. One should check with their human resources department or read the Summary Plan Description to find out if their particular 401(k) offers loans.

One can also consider a line of credit against their house. Depending on what the money is used for, the interest can be deductible on a Schedule A assuming that they itemize deductions.

Know thy preparer.

Make sure whoever prepares one's taxes that they have a Preparer Tax Identification Number (PTIN). A PTIN is an identification number that all paid tax return preparers must use on US federal tax returns or claims for refund submitted to the Internal Revenue Service. This is now required by the IRS and ensures, through education and updates, that your preparer is not a "fly by night" and is authorized to prepare taxes.

When in doubt, contact Oman, Berry & Associates, PLLC in The Woodlands, TX. Oman, Berry & Associates, PLLC is a firm of highly experienced tax professionals in both public accounting and industry who are dedicated to providing top quality tax planning, compliance and consultation services for individuals and small and medium sized businesses. Call 832-562-2000, email info@omanberry.com or visit omanberry.com to schedule a consult today.