By Cathleen Russo
More than anything else right now, your accountant is probably thinking about getting
ready for tax season.
While trick or treating is barely a fond memory, and a turkey dinner with family and friends is approaching, many CPAs and EAs are taking continuing education courses to catch up with the latest tax developments.
Between webinars, I like to remind my clients of a few things:
Contributions to state-authorized college savings plans (also known as 529 Plans) must
be done before Dec. 31. Such contributions are generally not deductible on your
federal return, but they can save state income taxes.
Donations to charities and payment of medical expenses must also be done before year-end to be deductible as itemized deductions. If you don’t think you can itemize this year,
it might be better to pay them after January 1 so they are bundled up with next year’s
expenses.
Deductible contributions to individual retirement arrangements (traditional IRAs) can be
made prior to April 15 of next year, but be sure to indicate what tax year it’s for and
double-check that you’re eligible to deduct them.
There are income and age restrictions on the deductibility of these contributions, and making corrections is very time-consuming.
If you changed jobs or had a major increase or decrease in income, it’s time to see that
your withholding is sufficient. Some folks have way too much withheld because they
see it as forced savings and relish receiving a big refund.
Others want to use the money themselves and dislike giving an interest-free loan to the government. A few clients don’t realize until April that they owe taxes and that they are subject to penalties.
This is preventable under many circumstances.
To avoid surprises, get in touch with your tax professional before the upcoming holidays
and see if they can give you an idea of what your tax situation might be.
Cathleen P. Russo is a CPA AND president of Cathleen P. Russo CPA PC
She has over 25 years of experience assisting small businesses, individuals,
estates, and trusts with managing their tax responsibilities. She can be reached at
516-360-1550 to schedule a no-obligation, initial complimentary consultation.
This article is presented for general information only and is not to be construed as
providing professional advice or creating a client relationship. No warranties, express
or implied, are made under any circumstances.