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How to Get Your Taxes Organized

6 ways to tackle your 2015 tax return, aspirin-free

By Marilyn Timbers, Voya Retirement Coach

It’s that time of year again — time to gather your old receipts, organize your yearly expenses, revisit W-2 forms and file your taxes. To some, the filing process can seem like a major headache, but with the right planning and proper knowledge, tax season can become less daunting.

As we gear up for Tax Day, here are six tips I’d offer as a financial adviser at Voya Financial Advisors to help you stay organized and relieve the stress:

1. Know the Key Dates

The most important part of preparing yourself for tax season is to stay informed. Start by taking note of the most important dates as they relate to filing in 2016.

Monday February 1

Although this date is well in the past, it’s important to note, since employers had until the last day in January to send you your 2015 W-2 earnings statement. This year, Jan. 31 fell on a Sunday, so the deadline slipped to Feb. 1. If you have yet to receive your W-2, I’d recommend getting in touch with your employer right away. This is particularly important for individuals who might have switched jobs last year.

Monday April 18

The most important date to note in 2016 is the unusual extension on the deadline to file tax returns. The official deadline (for people in most states) has been moved to Monday, April 18, due to the observation of Emancipation Day on April 15 in Washington, D.C.

This is also the deadline date for 2015 contributions to a traditional or Roth IRA.

Monday October 17

If you will file for an extension in April, you’ll be granted a six-month grace period to get all of your materials in order. So October 17 becomes the official deadline to file your 2015 tax returns electronically.

For a list of additional dates to keep in mind, review the IRS’s 2016 tax calendar.

2. Take Time to Prepare

I encourage my clients to allow plenty of time to make sure they have all the relevant paperwork so they’ll avoid any last-minute fire drills before the filing deadline.

Remember that many of these documents may be received electronically, so you will want to watch your email as well as your postal mailbox. Documents to keep an eye out for are: W-2 forms from your 2015 employers; 1099 forms, which report interest or dividend earnings and 1098 forms if you paid at least $600 in interest on a mortgage or student loan.

To stay organized, it is a good idea to put all of these documents in a file or envelope as you receive them. Certain types of investments — such as trusts, partnerships, or S corporations — will report money received from them on a K-1 schedule, but these documents are usually sent out later in the tax season.

You can also talk with a financial professional to review your materials and ensure you have covered all the bases.

3. Review All Your Tax Deductions and Credits

As you likely know, you can opt for the standard deduction or choose to itemize your deductible expenses. The standard deduction is a flat amount that doesn’t require you to come up with intensive documentation. When you itemize your deductible expenses, you must be able to provide proof of them (upon request) to the IRS. If you don’t qualify for the standard deduction or your total deductions are greater than the standard deduction amount, you might want to consider itemizing.

If you do take the itemized-deductions approach, gather up your receipts and records for last year’s charitable donations, property taxes and medical expenses. Be diligent about this, since they may help you receive a larger refund or lower your tax bill.

While major life changes such as purchasing a home or sending a child to college are easy to remember, it is the smaller everyday expenses that can often be easy to overlook. Try to keep this in mind as you prepare your documents to make sure you are taking full advantage of all possible tax deductions and eligible credits. Items that are often overlooked include child care, home office expenses and caregiving for elderly parents — all of which can be eligible for tax relief.


4. Use E-Filing and Tax Preparation Software

The IRS offers taxpayers e-file and direct deposit options, which are a great way to efficiently file your return and receive a refund. Filing your taxes online also creates an electronic record for future use; should questions ever arise about your tax return, you can avoid sifting through folders and stacks of paper by having everything in one place.

If you will receive a refund, set up a direct deposit with your bank, since it’s the fastest way to collect your funds.

There are many good options for tax prep software if you will be filing your taxes on your own. If you are working with a tax professional, ask which programs he or she prefer for organizing your data.

5. Fund Your Future

Tax season is a good time to review how much you are saving for the future. Remember that putting money away for retirement can lower your tax obligations. Contributions to your employer-sponsored 401(k) are taken directly from your salary, so the amount you contribute is not reported as taxable income.

For example, let’s say you have a tax rate of 25 percent and contributed a total of $5,500 to your 401(k) plan for the year. Had you not made that allocation and instead received the money in your take-home pay, it would have been taxed at 25 percent. By investing those pre-tax dollars into your retirement savings, you could potentially save $1,375 in income taxes for the year.

Remember: you still have time to contribute to a traditional IRA or Roth IRA for 2015. The deadline for those contributions is the same as the tax-filing deadline. Even if you are not eligible to deduct those contributions from your current taxes, there are other advantages: the Roth would grow tax-free and the traditional IRA grows tax deferred. If you have a financial professional, talk to him ore her about which is the best fit for you.

6. Take Advantage of the Higher Health Savings Account Limit

People with high-deductible health plans are eligible to contribute to Health Savings Accounts (HSAs), tax-advantaged accounts to save cash for medical expenses, and the contribution limit has increased for 2016. In 2015, the contribution limit was $3,350 for single filers and $6,650 for families. In 2016, the limit for singles remains the same, but amount has increased to $6,750 for families.

I encourage my clients to participate in these plans if they are eligible. Unlike flexible spending accounts, HAS funds can roll over year after year and can be saved for medical expenses in retirement.

A Final Thought

Many people can create stress for themselves by waiting until the last minute to file their taxes. By getting organized and staying up-to-date on potential changes, you can make the process much easier on yourself.

Tax season is also a good time to focus on your financial future; if you thoroughly prepare and take advantage of tax-advantaged investment vehicles, you put yourself in a position to save time and money in the long run.

Securities and Investment advisory services offered through Voya Financial Advisors, Inc. member SIPC. Neither Voya Financial Advisors nor its representatives offer tax advice.

Marilyn Timbers, Voya Retirement Coach Marilyn Timbers is a financial adviser with Voya Financial Advisors. A Certified Financial Planner, she serves on the Women Advisors Network Board at Voya Financial Advisors. Read More
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