The tax season is under way and if you have already filed your 2016 taxes ,congratulations! So wait, why should you still care about your 2017 taxes (the ones you will file in 2018)?
Believe it or not, what you do now throughout 2017 can make a difference in your tax refund when you file your taxes in 2018.
We don’t expect you will cannonball into tax planning this second, but below are six tips to help you get your tax feet wet for next season and ensure you get your biggest tax refund yet,next year.
Tips for Tax Year 2017:
- Stay Organized. Now that you filed your taxes, make it easy on yourself for next year and stay organized. Start a folder of important documents and financial records for today, which will help give you a jump-start come tax time next year. If you are self-employed you can use QuickBooks Self-employed to easily track your income, mileage, expenses, and capture your receipts the entire year. If you used TurboTax Self-Employed this year you are probably already on your way to tracking your income and expenses since you automatically get a year of QuickBooks Self-Employed when you use TurboTax Self-Employed.
- Consider reviewing your W-4 withholding. Did you get a large tax refund this year? You may want to think about adjusting your withholding. Withholding is the tax your employer takes from your pay each check. To update them, simply re-file your W-4 form with your payroll department. You can choose to update it whenever you want to throughout the year and TurboTax has a W-4 calculator to help you estimate your exemptions.
- Make charitable donations before the end of the year. Contributing to charity or donating goods can reduce your tax liability when you file your taxes next year. To keep track and value your charitable giving or donated items throughout the year, use TurboTax Its Deductible. The app will help accurately value and track your donations and easily import the relevant information into TurboTax when it is time to file.
- Lower taxable income by contributing to your retirement funds. Reduce your potential tax burden for next year by starting to plan for your future retirement. If you contribute to a 401(K) or a Traditional IRA, you will be able to take a dollar for dollar reduction in your income for your taxes. In 2017, you may contribute up to $18,000 ($24,000 if you’re 50 or older) to your 401K and $5,500 ($6,500 50 and older) to your traditional IRA. If you are self-employed you can contribute up to 25% of your income or $54,000 to a SEP IRA.
- Sign-up for healthcare if you paid a tax penalty for 2016. If you had to pay a tax penalty for not having health insurance in 2016, you have until January 31st to sign up for a Marketplace plan unless you experience a special life event. This way you will avoid paying a tax penalty next year, which will remain at $695 per adult (up to $2,085 for a family of 4 adjusted for inflation) or 2.5% of your income, whichever is larger.
- Update financial information in the Health Insurance Marketplace. If you bought 2017 Marketplace insurance during this Open Enrollment period and received a tax credit to help pay for coverage, don’t forget to update your financial information in the Marketplace throughout the year. This will ensure you’re getting as much help as you’re eligible for and also help you avoid having to pay back any extra tax credits (for which you’re not eligible) next year.
If you still need to file your 2016 taxes, don’t worry about knowing tax laws and tax forms. You can go online and start now. TurboTax will ask you simple questions about you and give you the tax deductions and credits you are eligible for based on your answers, maximizing your tax refund.