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Planning Next Year's Tax Return

Was tax time stressful for you this year? Why don't you make things easier for next year's tax filing by getting ready for it now? There are a number of things you can do so that next year you can avoid the last minute race to get it done. Below are a few things that you can start doing now.

1. Store Your 2012 Tax Return and Supporting Documents in a Safe Place. You may need to refer to it as you're completing your 2013 tax return. Also, you may need a copy of it if you apply for a loan or any type of financial assistance. As a matter of fact, you should keep all your tax returns in the same safe place.

2. Organize Your Tax Records. You should have a centralized place where all tax-related records are kept. All family members should be told of this location so that they can automatically place their receipts in this location. It makes it much easier than having everyone scrambling at the end of the year trying to remember what charitable contributions they may have made, or charity events that they may have participated in, etc.

3. Consider Itemizing Deductions. If you usually claim a standard deduction, you may be able to reduce your taxes if you itemize deductions instead. According to the IRS, if your itemized deductions typically fall just below your standard deduction, you can 'bundle' your deductions. For example, an early or extra mortgage payment or property tax payment, or a planned donation to charity could equal some tax savings. See the Schedule A, Itemized Deductions, instructions for the list of items you can deduct. You may find that planning your tax approach will pay off at tax time next year.

4. Adjust your Tax Withholding. Now is a good time to review your withholding to make the taxes withheld from your pay closer to the taxes you will actually owe for this year. Here is a tip: If you normally get a large refund, that means that you are probably paying too much in taxes now. Wouldn't you rather have more money in your pocket now? Likewise, if you owed tax when you filed, you may need to increase the federal income tax withheld from your wages. Use the IRS Withholding Calculator to determine whether you need to complete a new Form W-4, Employee's Withholding Allowance Certificate.

We at ManagingMoney.com feel it is important to stay current on tax law changes and do our best to inform our readers so that we can help you Save Money and Make Money. We will, therefore, continue to provide you with helpful tips and IRS announcements throughout the year as they come available.

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