Time To Get Tax Refund: Talk To The Taxman Now To Save Taxes Later

Posted on 21 September 2011

Time To Get Tax Refund: Talk To The Taxman Now To Save Taxes Later: Saving taxes is on the minds of everyone, but unfortunately, no one really starts to think about that topic until next March or April when your 2011 Income Tax Return will be due. However, if you talk to a taxman or some form of an accountant right now as we head into the fourth quarter of 2011, you might be able to save a whole heck of a lot of money by saving taxes come April 15th!

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The best way that you might be able to save taxes is by putting money into an IRA or into your company’s 401(k) (or 403(b), or some various 400 device that acts as a retirement vehicle). The money that you invest into an IRA (up to $5,000 or $6,500 if you’re over the age of 50) or a 401(k) (up to $16,500 or $22,000 if you’re over the age of 50) is considered to be tax deferred money. That means that you don’t pay taxes on that money now, but you have to pay taxes on it when you utilize the money after you retire.

If you were to put away $5,000 into your IRA or 401(k) and were at a 15% tax bracket (which, in 2010 was up to $34,000 for single filers and up to $68,000 for joint filers), you would save $750 in taxes. Though you don’t have access to that $5,000 any longer until you reach the age of 60.5, you also aren’t giving Uncle Sam that money.

Many people with disposal income that are in high tax brackets such as the 33% bracket or the maximum, the 35% tax bracket will often put away the most money that they can into a 401(k) or some sort of retirement device, not necessarily for the purpose of putting money into retirement plans, but for the purpose of saving money in taxes.

Another item that your accountant or CPA will probably talk with you about now is tax planning. Though the tax code for 2012 hasn’t been written yet, CPA’s will have a reasonable idea of what the tax codes will look like and will be able to show you approximately where you stand with your tax return for 2011. Especially if you are on a straight salary, your tax preparer will be able to tell you if you are having enough withheld from your paychecks in Federal Withholding Tax, or whether you have too much being withheld. The best job your tax preparer can do for you is to make you owe the most money possible without you owing penalties and interest.

And why is that? Though you may think that it’s a great deal to get a tax refund in the Spring, think of that as a loan that you gave to the government… interest free! If you had access to that money all year long, at least you would have the use of the funds and could appropriate them as you desire, and then give Uncle Sam his share of the money.

In October, November, and the beginning of December, your tax preparer also doesn’t have all that much going on. He can take more time with you to discuss the very specifics of your tax return and answer any and all of the questions that you have. Your accountant or CPA is likely to find even more items that you are able to use as a tax deduction if you bring them up in a November meeting than he or she might be able to do in March or April when you do your taxes.

So be sure to call up your taxman today and make an appointment to go see him or her to make sure that everything is right with your income taxes. Save taxes today by contacting your CPA!

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