5 Cinco de Mayo tasty tax tips to complement your guacamole y cerveza

How do I celebrate each May 5th? With guacamole, cerveza y tax tips! That means here in our Texas casa, every day basically is Cinco de Mayo.

Guacamole and chips_Sharon Chen_delishplan-dot-com

Yes, there really is a tax component to Cinco de Mayo beyond the use of my poco Español as a framework for this list.

That’s why I feel justified in urging you — before you lift a glass, be it brimming with Dos XX or a margarita, to commemorate Mexico’s victory over French troops at the Battle of Puebla on this day in 1862 — to check out these five tax-smart tax moves.

Uno: Get help.
If you put off filing thanks to an extension, that might be a good indication that you need tax prep and planning help. Now is a great time to find the perfect tax pro. The high tax season rush if over and many tax preparers, although dealing with existing clients who, like you (and, full disclosure, me!) needed extra time to fill out their forms, are again accepting new clients.

Since you’ve got time until the Oct. 16 absolutely final filing deadline, you can conduct a careful and considered search for a tax pro — the Internal Revenue Service wants to help with its tax preparer directory — and then check him or her out thoroughly to ensure they meet your tax needs.

Dos: Contribute to your retirement plan.
Thanks to the tax breaks of many retirement savings options, putting money into these accounts is a win-win. You could get an immediate tax break and save enough to have the type of retirement you want.

If you don’t have an IRA, open one. If you do have an IRA, contribute to it. The sooner you put money in, the sooner the power of compounding goes to work.

Most younger people will benefit more from a Roth IRA; it won’t provide an immediate tax break, but the money and all its earnings can eventually be withdrawn tax-free. Some folks, though, still find a traditional IRA, which might provide an above-the-line deduction on next year’s taxes, works better for them. And if you have a 401(k) at work, be sure to contribute enough to get the maximum match from your employer.

Money put into any of these three nest egg options also could help you qualify for the Saver’s Credit.

Tres: Rebalance your portfolio.
If in addition to your retirement savings you’ve invested in other assets, now’s a good time to take a look at how they’re doing. It might be time to unload some of your holdings, either because they’re not doing as well as you had hoped or because they’re at an all-time high. But remember that selling stock losers and winners both have tax implications.

Also note that while you do need to keep Uncle Sam’s potential cut of your unearned income in mind, don’t make investment moves solely for tax reasons.

Cuatro: Set up a record keeping system.
Was filing a total mess this year because you spent half your time tracking down forms and statements you needed to fill out your 1040? Don’t go through that again.

Set up a record keeping system for collection of the tax information you’ve likely already started assembling, such as receipt for business meals or charitable gifts and a log of deductible miles you’ve driven, so that it’s at your fingertips next filing season.

If you’ve already got a record keeping system you like, great! Just make sure you’re using it.

And as this week’s Weekly Tax Tip notes, you also need to spend some time on storing the material your used to file this and previous year’s taxes. Many types of tax-related records should be kept for several years just in the case an IRS auditor ever has questions about your past filings.

Cinco: Create a bunching strategy.
Easy to access tax records will help you devise a tax-saving bunching strategy. This is just what it sounds like. You group tax breaks so that you can maximize them.

This is particularly important for tax expenditures, such as itemized claims for unreimbursed business expenses and medical costs that require you meet a threshold before you can claim them.

With medical expenses, for example, you must have allowable health-care related costs that are more than 10 percent of your adjusted gross income before you can claim them. Certain job related and miscellaneous expenses have to clear a 2 percent of AGI hurdle to be deductible.

If you start tracking those expenditures now instead of in December, you’ll have a better chance of meeting the deduction threshold. Or you might realize you need to push some costs into the next tax year to get the most of them then.

Keep counting: If you want to keep counting beyond cinco and Cinco de Mayo, you can find more tax moves to make in my May 1 merry tax moves post, as well as in the obviously-named May Tax Moves feature in the ol’ blog’s right-hand column.

If you’re a business owner, you’ll want to note these five tax tips tailored for you.

And don’t forget the previously mentioned weekly tips or daily ones if you’re still working on your 2016 tax return.

After you check them out, then — or whenever 5 o’clock arrives in your somewhere — enjoy your Cinco de Mayo celebration.

Tres avocados by Kay Bell

Click on the tres avocados image for some tasty guacamole recipes.

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Source: http://feedproxy.google.com/~r/DontMessWithTaxes/~3/ALd-x-faKyo/5-cinco-de-mayo-tax-tips.html

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