Now that the year is halfway over, it’s a good idea to reflect on your finances, and look ahead to the coming months. This includes considering what’s next for your taxes.
As you arrange your finances for the second half of the year, here are some tax tips to incorporate:
Organize Your Paperwork
The best way to organize your taxes is to do so year round. If you didn’t keep your tax paperwork organized the first part of the year, now is the time to rectify that problem. Make it a point to go through your receipts, and identify your tax-related documents. Set up files for them, and consider documentation you might need. If you don’t have the right documentation, find out what you need to do in order to obtain it. It’s better to do this now than it is to be scrambling at the end of the year.
Plan Deductions and Credits
Look at what tax deduction and credits you might be eligible for. You can plan ahead and decide which to take. There are still some green energy tax credits available, for example. Large systems, like solar panels or geothermal, are eligible until the end of 2016. So if you’ve been thinking about putting in a system, you can plan for it now. Because these are often on the expensive side, being able to plan ahead now and save up makes sense.
This tactic can be used for other tax deductions and credits as well. If you plan to give more to charity, you can do that now, doing it over time, rather than trying to come up with the donation all at once.
It’s a good time to check your retirement account contributions to see if you have room to boost your contributions, and the ability to do so. This makes things easier in the long run, since you can spread out your contributions and reduce the stress on your budget.
Don’t forget about business tax deductions. Now is a good time to plan business related travel, or purchase some office equipment. Think about what would benefit your business, and then determine if it makes sense to move forward with the spending. The tax situation might mean that it makes sense — and that it can improve your success as well.
See Where You’re At with Your FSA
If you have a Flexible Spending Account, it’s a good idea to see where you are at in terms of using the money you’ve been setting aside. Yes, it’s nice to get a big tax deduction, but, at the same time, you have to use most of that money or lose it. Look to see where you stand with drawing down the money in FSA. You can begin planning how to use it, and make appointments, rather than risk losing the money come January.
Rebalance Your Investment Portfolio
It’s always a good idea to periodically check your portfolio and make sure your asset allocation is in line as it should be. You also want to check for investments that are going to remain losers. You might even need to sell certain winners for gains.
If you decide it’s time to sell an investment, see if you can match up capital gains and losses. You can also use tax harvesting to offset regular income. Look into your options with your portfolio to make sure that everything is still serving its purpose. Then, decide what needs to be adjusted to ensure that your portfolio performance stays in line — and get a tax benefit to boot.
Consider visiting a tax professional to help you plan out your moves for the second half of the year. You might find yourself in much better shape overall with a little tax guidance.