Accounting Assets: Five 2012 Tax Tips

Posted by on January 25, 2012

It’s Never Too Early: Five 2012 Tax Tips

Here are five tips to help you get ahead of the game for 2012 taxes. It’s never too early to be thinking about your 2012 tax return.

Tip 1: Lower your tax bill and save for retirement at the same time.

Every dollar you contribute to a regular IRA not only represents a dollar saved you’d have probably otherwise spent, but also reduces your 2012 taxes. Are you in the 25% tax bracket? If so, your $100 IRA plan contribution reduces your net income by only 75 cents (in most states, your contribution actually costs you even less, thanks to state income taxes). Everyone with earned income under 70 ½ years old can contribute to a regular IRA. Whether your IRA contribution is deductible depends on your income, marital status, and ability to contribute to a workplace retirement plan.

Tip 2: Maximize your match (and save on your taxes while you’re at it)

Taking advantage of an employer matching contribution on your company’s retirement plan is perhaps the biggest no-brainer of personal finance. Nowhere can you obtain a superior guaranteed rate of return on your money. A dollar-for-dollar match means your $100 contribution is immediately worth $200. Your broker can’t match that. Be sure to contribute at least as much as your employer will match. Also, it pays to know how your retirement savings is taxed.

Tip 3: Save your receipts to maximize your deductions.

You must save your receipts if you run a business. Even if you work for someone else, you should still retain certain receipts including those received upon making charitable donations. Not only will doing so make it easier for you to remember to deduct your contributions at tax-time, but saving this paperwork is required by the IRS. Certain job-search expenses are deductible too, so be sure to save those receipts!

Tip 4: Read the newspaper (paper or digital)

Perhaps never before in American history has the individual tax environment been in more flux than it is today. Tax laws change constantly, and it’s nothing new, but keeping yourself updated about what is going on never hurts. Luckily, tax software is always updated to reflect the most current tax laws.

Tip 5: Get in front of your changing tax situation.

If your personal situation changes from one year to the next, your tax circumstances will also. Unfortunately, the IRS won’t tell you about how those changes impact you. Rather, it’s your responsibility to take care of any new tax requirements and to do so long before the April 15, 2013 filing deadline for 2012 taxes.

Start saving today!

Excerpts from “The TurboTax Blog”, http://blog.turbotax.intuit.com


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