5 Tax Tips for the New Year

Happy New Year! For most of us, the new year is time to make resolutions and attempt to make a fresh start. It’s also time when many folks start thinking about filing their taxes. If you’ve said goodbye to 2012 and you’re ready to tackle your 2013, here are 5 tax tips to keep in mind for the new year ahead.

1.  Don’t Give Up on Last Year Yet

Even though it’s now 2013, there is still time to make some tax moves that will affect your 2012 taxes. One big move I would suggest if it’s available to you is to make a tax deductible contribution to a Traditional IRA. You have up until April 15th or the date you file your taxes to make a contribution for the previous tax year. This move would put more money in your retirement savings and it would be a big deduction from your income, likely lowering your taxes (or increasing your refund) by a nice amount. An IRA can be opened at a variety of places: discount online brokers, banks, mutual fund companies, etc.

2.  Getting a Tax Refund? File ASAP!

If you’re expecting a refund, make an effort to file your taxes as soon as you can. The sooner you get the money the sooner you can put it to work for you in a saving account, to pay down debt, or to spend on that vacation you’ve been wanting to take. Remember, this is your money, so don’t delay.

3.  Know Your Limits

Thinking about the year ahead I like to plan my savings goals for the year based on the published annual contribution limits set by the IRS on retirement, health, and education savings accounts. Each year these limits typically change, so you’ll want to adjust your automatic savings withdrawals to reflect the new yearly goal. For instance, in 2013, the contribution limit on Roth IRAs is going up to $5,500 for most individuals($6,500 if 50 or older). That’s about 458.33 a month for the next twelve months. Be sure to adjust your contributions to reflect this new year amount.

4.  Adjust Your W-4 Withholding

Another adjustment you should potentially make in the new year is to your employer withholding. Pick up a W-4 form and complete it based on your current situation. Big life changes like having a baby and getting married can have a big impact on your withholding, so be sure to keep your employer informed in the new year. The W-4 is your chance to tell your employer how to withhold for federal taxes.  TurboTax W-4 calculator can help you figure out how much you should withhold from your paycheck.

5.  Resolve to Keep Better Records

Finally, make this year the year when you keep better financial records. This will make your tax filing season much smoother. Keeping better track of your financial and tax situation could have a nice impact to your bottom line in the new year.