It's the end of December and we are still teetering on the fiscal cliff. As we wait for some sort of resolution from Congress, what should the average taxpayer being doing to get ready for tax season?
The most important thing to do right now is to pay attention. Keep an eye on Washington, D.C., the latest tax developments, and news and updates regarding the fiscal cliff. Most importantly, once a decision is made on how taxes will change, make an appointment with your tax professional and start getting ready to file your taxes. With all of the complexity surrounding taxes, engaging with both the tax preparation process and a tax preparer to guide you in the process is even more important than ever. It's never too early to get ready to file your taxes, and being engaged and organized will also help you prepare for any late changes.
To get started, gather all of your records, including a copy of last year's tax return. You can use the prior-year return as a guideline/checklist to make sure you include all income and deduction records for this year.
Here are some additional tips to help you reduce your taxes during the last few days of this year:
- Put more money into your 401(k) and your IRA: You can contribute up to $17,000, with an additional $5,500 allowed contribution if you are 50 or older.
Yes, we are teetering on the fiscal cliff, but no matter what happens in the negotiations, don't delay. Tax season will come no matter what. The best thing to do now is to be prepared and take advantage of these last few days of the year to maximize your 2012 tax return.
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