Tips for the upcoming tax season [Financial Perspectives]

It is hard to believe it is tax time already. Most companies have sent out their W-2s.  If you haven’t received yours yet, you should have it by the end of this week.  Banks, investment firms, and state and local governments are also in the midst of sending out their information. There are a few things you can do to help get organized before you meet with your tax preparer (or get set to file your own return).   First, take out last year’s return and look at all the information you needed to file. On the income side, you may have interest from a bank account or CD or dividends and capital gains from an investment firm.  If you are retired and receiving Social Security, you should have a statement showing your earnings. Similarly, if you receive a pension or take distributions from an IRA you should receive a 1099R showing these payments.

Second, if you itemize your deductions, you should start to compile a list of all the expenses you incurred by category.  For example, if you make charitable contributions make a detailed list of all the checks and cash you donated by charity and add it up. Similarly, if your family has enough in medical expenses, you will want to do the same thing here . If you have a tax preparer complete your return, you can probably save yourself some money by having these expenses added up.  In some cases, CPAs and tax preparers will tell you that they cannot finish the return until you organize and add up the expenses on your own. Just a reminder for charitable deductions: you need to keep proof of all donations – cancelled checks and/or acknowledgement from the charity are some of the best ways to do this.

Third, take a look at any credits you may have been able to benefit from last year such as the child tax credits, child care credit or education credits. Make sure you have the proper documentation to receive the same credits for the 2012 tax year. Just a reminder about the child tax credit – if you have any children who turned 17 by Dec. 31, 2012, they will not be eligible for a child tax credit any longer.  Many people think the credit is available until the children are 18. Finally, if you are not very organized, do not procrastinate. Getting yourself organized now you can help yourself immensely – April 15 will be here before you know it.

Good luck with your planning!

The views expressed are not necessarily those of Cambridge and should not be construed as an offer to buy or sell any security. Jim Heisler, CFP®, CDFA™, CASL™ Family Wealth Services, LLC 8725 Frankford Avenue Philadelphia, PA 19136 jim@familywealthservices.net 215-332-4968 Jim Heisler is a Certified Financial Planner with Family Wealth Services in Holmesburg. You can read all his Financial Perspective columns here.