10 tax resolutions for 2016 + more January tax moves
Friday, January 01, 2016
Hello 2016! Some of us (not me) got up early to welcome you. Others (me, as you can tell from the posting time on this item) are still easing into this brand new year.
But one thing that most of us soon will be doing, regardless of our post-New Year's Eve celebration energy level, is making New Year's resolutions.
Yeah, I know making resolutions is the annual, and usually temporary, victory of hope over experience. Most of our attempts to make ourselves and our lives better, at least within the strictures of quick and catchy Jan. 1 lists of goals, are doomed to fail.
Time, again, for tax resolutions: But I refuse to surrender, at least when it comes to tax resolutions!
Yes, there is such a list. I made one this time last year.
The thing about tax resolutions is that even if you're successful in meeting them one year, they generally tend to come back around 365 days later.
And in many cases, tax resolutions mirror the more mundane tallying of things we say we want to do or do better in the coming year. That's why this year, I've listed 10 popular and recurring resolutions and their tax counterparts. And for the taxes, I've suggested how you can meet them in 2016.
1. Lose Weight
While it's not easy to drop those extra pounds you picked up over the holidays, you can lose the weight of doing your taxes. Hire a tax professional this year. Most taxpayers use one. And there are lots of tax pro options. But start the search for the tax preparer who best fits your tax needs soon. Tax pro calendars fill up fast this time of year.
2. Get Organized
It's hard to get your whole life organized, but it's not that difficult to organize your taxes. Set up a tax record keeping system. It doesn't have to be elaborate, just effective. If your taxes are not that complicated, something as simple as an accordion file can work. Basically, any system that's complete and easy for you (or your tax pro; see resolution #1) to access is OK with the Internal Revenue Service.
3. Spend Less
This is a commendable personal and tax goal. You can ensure you don't spend too much on your taxes by checking out these often overlooked tax breaks. Be careful, too, not to make common tax mistakes that could cost you.
4. Save More
If you follow the suggestions in resolution #3, you'll owe Uncle Sam less, meaning you can stash that cash away for your own use. And you can add even more to your personal savings by also adjusting your payroll withholding. This is something you definitely want to do if you regularly get a large refund. Instead of letting the Bank of Uncle Sam hold your money, interest free, for the tax year, get that cash in your paycheck throughout the year. Then you can use it pay bills, including high-interest credit card balances, as well as set up an emergency fund or save for a longer-term big goal, such as buying a house or car.
5. Learn Something
I loved school, so I'm all for continuing education. The tax code has several tax breaks for students and their families looking for help in paying college costs. Taxes, too, are full of lots more exciting learning opportunities. And new-found tax knowledge can help you shave some off your IRS bill. Stick with the ol' blog this 2016 filing season and you'll find a daily serving of updated tax tips (Weekly and coming soon, Daily), news, humorous tax tales and myriad other ways to get your taxes done with the least pain and most savings gain (again, see Resolution #4).
6. Help Others
One of the greatest feelings in the world is helping out others. You can do so as volunteer at your favorite charity. While the time you spend doing good work at the nonprofit isn't tax deductible, other volunteer-related acts can provide tax benefits. You also can help lower income and older taxpayers complete their taxes by becoming a Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) volunteer.
7. Break Bad Habits
If you smoke or tend to drink a little too much, breaking those bad and unhealthy habits is an annual resolution. But this could be the year you achieve that laudable goal. And the tax code can help. You might be able to claim an itemized tax deduction for qualified medical costs connected with smoking cessation programs or an addiction rehab facility. If your prime temptation is food, the cost of medical weight loss treatments might be deductible, too (see Resolution #1).
If you want to see the world, the tax code could offer some travel help. When your travel is business related, you can deduct your driving by claiming the standard mileage rate. It's dropped a bit for 2016, but that's mainly because gasoline is cheaper. And if you're diligent in separating costs, you could get a little tax help when you combine business and personal travel.
9. Spend More Time with Family
It's easy to put off filing your taxes, especially if you're going to owe the U.S. Treasury. But if you get your taxes out of the way as soon as you can -- and the 2016 filing season opens on Jan. 19 -- you'll have that out of the way, giving you lots of tax-free time to do what you really want, like spending time with family and friends. Plus, by getting your taxes done early in the tax season, you beat tax criminals to the punch. Since you've filed, they won't be able to use your tax data to file a fake return claiming a fraudulent refund.
10. Fall in Love
OK, this is a tough one on both regular and tax resolution lists. You can't really force love. It enters your life when Cupid decides it's time. When that does happen, you'll want to make sure you and your spouse are aware of all the tax implications of wedded bliss.
And while I can't guarantee you'll fall in love with your taxes, if you work on achieving Tax Resolutions 1 through 10 this year, you shouldn't hate your annual tax task as much!
Tax moves to make in January: You also can keep track of general tax moves by checking out the ol' blog's monthly tax moves over in the right column.
Some of the January Tax Moves are covered in the 2016 tax year resolutions. But there are some additional tax tasks that are specifically pegged to the first month of the year, or at least can benefit you more the sooner in the tax year that you make them.
You'll find the monthly tax moves under the countdown clock that's keeping track of how long until this year's filing deadline, which for most of us is pushed back to April 18.
I'll let you peruse the suggestions at your own pace based on how hard you partied on New Year's Eve and your personal recovery ability. But when you're up to it, do get to the tax tasks -- and New Year's resolutions, personal and tax -- that apply to your situation. You'll be pleased with all the payoffs.
Happy New Tax Year!
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