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How Reviewing Your Taxes This Summer Can Save You Money Next Tax Season

Summer is unofficially here! Except for a few places in the country still getting a bit of last minute spring snow, the rest of the country is warming up, schools are letting out, and that can only mean one important thing - time to think about your taxes.
Mark A. Steber
By 

Chief Tax Officer, Jackson Hewitt Tax Service

Chief Tax Officer, Jackson Hewitt Tax Service
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Summer is unofficially here! Except for a few places in the country still getting a bit of last minute spring snow, the rest of the country is warming up, schools are letting out, and that can only mean one important thing - time to think about your taxes.

The new season ushers in thoughts of sun, fun, water and barbecues. The last thing you're thinking about is taxes. I get it, but we're almost halfway through the year, and now is an important time to check your tax pulse for the remainder of 2013. By taking the time to review your tax situation now, you can be sure you are on track to make the most out of tax time next year when you file. Keeping your finger on your tax pulse throughout the year allows you to make changes that can improve your tax situation. If you wait until you file to get a handle on your taxes, it will be too late to make changes that could have put extra refund dollars in your pocket.

What should you do now to ensure your tax pulse is strong and healthy? Here is a list of seven things you can do today to keep you tax situation in good health for when you file your return next year:

  • Review your financial profile: Take a look at the past six months of activity regarding finances and earnings. This will also allow you to have a better sense of what you can expect for the remainder of the year.

  • Predict the future using your last pay stub: With just about six months to go in the year, it is possible to do a tax projection of where you may expect to be for the full tax year. It is also a good time to review the withholding amount that is listed on a paycheck and to make the proper adjustments if necessary.

  • Keep an eye on tax-saving strategies: Common activities such making home improvements may lead to tax benefits. For example, the Energy Tax Act offers tax incentives for energy-efficient home repairs. If you need to replace a hot water heater, install a new a/c unit, re-insulate your home or put in new windows, making a "green" purchase can help you save on your taxes.

  • Evaluate what you are saving and how: Look for ways to participate in tax-free savings opportunities. Many companies offer a 401(k), or another type of contributory retirement program. These are helpful ways to save and reduce your taxable income. Check into what your company offers, and consider investing to save for retirement tomorrow and reduce your taxes today. The maximum contribution amount is $17,500, but if you turn 50 this year, or are already 50 or older, you can increase your contribution by an additional $5,500. If you've been unable to participate so far this year, see if contributing or even increasing your contribution for the remainder of the year might work for you. Make sure you figure out exactly how this will impact your take-home pay so you can be sure you're making the best decisions for your particular situation.

  • Watch for major life changes: If you are planning on, retiring, becoming the primary caregiver for an aging relative, having a child start college or graduate and go out on their own, you may have hidden tax deductions you weren't aware of. These and many other major life changes can provide many tax deductions and credits that you can plan for now to maximize your tax benefits at tax time.

  • Commit to getting organized: As you go through the year, hang on to necessary receipts and paperwork that may help you when you file next year's tax return. This includes any proof of payment for home improvement services and items, medical expenses and items or money donated to charity. Storing any tax-related documentation in a shoe box, a folder or a drawer in one easy-to-find location means less scrambling next year.

  • Take college or trade school courses: You may qualify for the American Opportunity Credit if you are enrolled half-time or more in a degree or certificate program, or you may claim the Lifetime Learning Credit if you are taking a few courses to help improve your job skills.

    • If you take the time to review and organize your tax situation now, you can make sure you don't have unexpected surprises when you file your tax return in six months. Take a break from the summer weather for a few minutes. The knowledge of what to expect regarding your taxes, either a big refund or setting more aside for a projected tax balance due, will help you enjoy the rest of your year and may even put a few more dollars in your pocket.

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