6 Last-Minute Tax Tips for Your Clients
Filed under: The Advisor's Blog
As a CPA, your practice is about to be in full swing as tax season gets underway. As you know, there are still some strategies your clients can utilize to lower their overall tax bill, or at least ease the pain of tax time. Pass along these six tips to panicked clients, and tell them to make these moves by April 15 if they want to save money at filing time.
Contribute to retirement accounts. Traditional and Roth IRA contributions must be made by April 15 in order to count as 2014 tax deductions. Make sure your clients have made the maximum tax-deductible contributions, and remember to advise clients over age 50 to take advantage of additional catch-up contributions.
Make an estimated tax payment. Anyone who forgot to make an estimated tax payment in the fourth quarter can still do so by January 15, and avoid a late payment penalty. Penalties may still apply to the other three quarters, though, if they forgot to make estimated payments during those times.
Itemize deductions. Most workers know about mortgage interest and charitable donation deductions, but there are other, lesser known deductions for which they may qualify. Now is the time to research those deductions and plan ahead for tax filing. Other expenses which can be deducted include the cost of owning and operating a business vehicle, job-hunting expenses, professional dues, tax preparation fees, and possibly medical expenses, depending upon age and the total amount of medical bills.
The rules for claiming a home office tax deduction have loosened considerably, so self-employed workers or even those who work from home occasionally should take notice.
Collect Social Security numbers for dependents. Anyone who had a baby late in the year should wait for the new Social Security card to arrive, rather than filing without it – even if this means filing for an extension. Divorced spouses or married couples who file separately should decide who is claiming the children, because the IRS will double check to make sure children aren’t being claimed on two different returns.
Get organized. A variety of forms will be needed at tax time, including W-2s, 1099s, and interest statements for mortgages and investment accounts. Many of these will be arriving in the mail sometime in January, so advise clients to be on the lookout for them. Receipts from last year’s major purchases or charitable donations will also be needed. It’s easier to gather these ahead of time, rather than waiting until the last minute and having to scramble to find everything.
File for an extension. Many people stress about the April 15 deadline, but if they aren’t ready they should know that filing for an extension is an acceptable option. Doing so will buy them six more months to gather important records and meet with their tax advisor, and prevents costly penalties for filing late without requesting an extension.
