Maximize Your Tax Savings
“I believe we should all pay our taxes with a smile. I tried, but they wanted cash.”
If you’re anything like me, you’re thrilled that tax season is over. Reviewing your tax returns is probably at the bottom of your to-do list. But it's a valuable exercise that can uncover hidden opportunities and potential issues. Whether you're still working or enjoying retirement, a thorough review can help identify excess estimated taxes, additional ways to reduce your tax liability, and possible errors or omissions.
With the complexities of state and federal tax laws, taking the time to examine your returns now can save you time, effort, and potentially money in the long run. It will also give you a chance to address issues before next year (and you may have time to amend returns if needed).
To assist you in reviewing your filings, I’ve prepared a checklist for retired taxpayers as well as one for taxpayers who are still working. Each checklist outlines nearly two dozen considerations to help guide you through your returns and circumstances. Just skip down to the section that matches your current situation.
Still Working
In this checklist, I highlight points to consider on your tax return if you are working, including:
Review your filing status. If you are married should you automatically file jointly with your spouse or might there be situations where you might consider filing separately?
If you have dependent children, you may be eligible for certain credits.
If you are divorced or widowed, there are filing steps for you to take depending upon timing and circumstances.
If you had investment income for the prior year, there are reporting issues that you will want to be sure you address in connection with this income.
If you own tax-advantaged accounts during the prior tax year, there may be some reporting issues to consider. Did you convert a traditional IRA to a Roth? Did you contribute to an HSA or a 401(k) plan?
If you own rental real estate or if there are state-specific issues to be considered.
Click the image above to download the free checklist
Retired
In this checklist, I highlight points to consider on your tax return if you are retired, including:
Review your filing status. If you are married should they automatically file jointly with your spouse or might there be situations where you might consider filing separately?
If you are divorced or widowed, there are filing steps for you to take depending upon timing and circumstances.
If you had investment income for the prior year, there are reporting issues that you will want to be sure you address in connection with this income.
If you owned tax-advantaged accounts during the prior tax year there may be some reporting issues to consider, especially if you took any distributions from these accounts. If you have reached your RBD, did you take the full amount of your RMD from your retirement plans? Did you do a rollover to an IRA? Were any distributions taken from an after-tax IRA account?
Did you have a high level of medical expenses or if there are state-specific issues to be considered.
Click the image above to download the free checklist
Action Items
Here are a few action items I would recommend:
Download and utilize the appropriate checklist: Download either the "Still Working" or the "Retired" checklist, depending on your current status. Use this checklist to guide a thorough review of your prior year's tax returns.
Review your filing status: Carefully consider your filing status (e.g., married filing jointly vs. separately) and whether it was the most appropriate choice for your tax situation.
Examine investment income and tax-advantaged accounts: Check for accurate reporting of investment income and any activities related to tax-advantaged accounts (e.g., IRA conversions, contributions, distributions, Required Minimum Distributions).
Consider scheduling a meeting: While the checklists can help you spot great ways to identify all the different opportunities to consider, I am always available to meet with you and discuss your finances, goals and tax situation in more detail.
Look for potential errors or omissions: While reviewing your returns using the checklists, be on the lookout for any possible omissions or mistakes made by your tax preparer.
~Alex
Whenever you’re ready, there are 3 ways I can help you!
Organize Your Money Course: Are you ready to take control of your financial future, instead of letting it control you? This course will help relieve your financial anxiety and get you back on track.
Book a 1-on-1 Meeting: Whether you’re looking for assistance with your financial planning needs or are in the financial industry and you want to learn how to grow your practice, I can help.
Lake Avenue Financial: If you’re looking to build a relationship with a team who can help simplify, educate, relive the stress caused by money decisions and make sure you are on your way to financial independence, we are here to help!
Be Inspired to take Action
Join over 7,000 readers of the Inspire Action newsletter for tips, uplifting stories and actionable steps to guide you through your financial journey.