Tax prep tips

The end of the year is coming up fast and soon holiday plans will be foremost on everyone’s mind. Before the holiday season takes all your attention, devote a few hours to looking ahead to income tax season and do some planning now.

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By Sheldon J. Donner

Sheldon J. Donner is a CPA and Principal of Taxation at AGH Business Advisors & Certified Public Accountants. He can be reached at shel.donner@ aghllc.com or 404.835.1878.

The first rule of income tax planning is to PLAN. Start by comparing your 2015 tax situation to where you are in 2016. Why? Primarily so you can cover all your bases and you won’t overlook anything that matters. Changes from one year to the next may show up in your capital gains, charity expenses, medical expenses, Social Security income, RMD (required minimum distribution) amounts, filing status, etc. Other changes may show up in your amount of income, nature of income or deductible fees.

Use an electronic spreadsheet program (like Excel or Numbers) and set up three columns. Label Column 1 as last year (2015), label Column 2 as this year (2016), and label Column 3 as next year (2017). Then fill in all the appropriate information from last and this year. It’s a good idea to include next year in your planning since it may be wise to defer some income to 2017, if possible, or to accelerate deductions into 2016 (especially if you’re bunching itemized deductions).

Once you’re done and the tax for each year (both federal and state) is calculated, you’ll be able to make your “What If” calculations. This will allow you to try some different scenarios and see which is most beneficial.

Keep in mind that tax planning is not brain surgery—it’s more difficult. If you have any concerns or issues about your accuracy or completeness, consult a tax professional who’s capable of tax planning.

This information is general in nature and should not be considered to be tax advice. Discuss any and all matters contained herein with your tax professional for tax advice which fits your personal situation.

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