The end of the year is usually a season when many people reflect on the past years and make resolutions for the coming year. For most people, taxes are either not considered for resolutions or come at the lower places in terms of priority. However, proper planning of taxes can save you a lot of money. Therefore, you may consider making tax plans for 2012 for a change and see how such plans will positively affect your finances. Below are some tips for making such tax resolutions:
Adjust Your Withholding
One of the tax moves that you can make early 2012 is to adjust your withholding. You will need to consider any changes that you expect for 2012 and how the changes will affect your taxes. You can then make withholding changes appropriately. This will ensure that you are not paying too much or too little to Uncle Sam and therefore be better placed at the end of year.
Plan Your Tax Deductions
You can also plan for your deductions to ensure that you save as much as possible or plan to get to the itemization level. You can plan way at the beginning of the year the amount that you will give in qualifying donations, the amount you will spend on qualifying business deductions, qualifying workplace attire, health spending account and qualifying educational expenses. By planning such expenses well in advance, you can spend with taxes in mind and take as much tax saving as is possible.
Make Retirement Contributions Adjustments
Another quality move you can consider for 2012 is increasing the amount of money that you are paying into your retirement account. Ensure that you are saving as much as you can get a tax saving for. For IRA contribution, the tax free cap is $5,000 for those under 50 years and $6,000 for those 50 years and above. You can also plan to increase your 401(k) contribution to the maximum that your employer can match.
For those in self employment, there are various tax sheltered retirement accounts that you may consider saving your retirement funds in. These accounts include the SEP IRA account, the SIMPLE IRA account and Solo 401k. These retirement accounts enable you to invest funds into your retirement depending on the profits that you make in a given year. SEP IRA allows you to save a quarter of your profits to a maximum of $49,000 in profits. SIMPLE IRA allows tax free retirement savings of a maximum of $11,500 for those below 50 years and $14,000 for those 50 years and above.
Review 2012 Tax Adjustments
Another tax move you may consider is reviewing the tax deductions and tax credits that have been added for 2012 and those that have expired in 2011. You can adjust your expenditure with regard to such tax changes. Reviewing the way taxes will change in the new year will also help you be prepared for such changes.
Consider Filing Early
You may also make a decision to file taxes early. Filing early ensures that you do not get caught up in the last minute rush. You can therefore, take more time in preparing the returns. Tax consultants are also more available for you when you file early as opposed to towards the deadline. You also get to know your tax debt in good time and can make plans to pay the dues. On the other hand, if you will be receiving a refund check, you will get the check early and use such funds to meet your expenses.