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5 Summertime Tax Moves

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TaxesMost of us think of tax time as the time from the end of December through the middle of April. And, while this is the time of year that everyone really starts thinking about gathering documents, and figuring what they owe (or what refund is coming), the truth is that you’re better off keeping things organized throughout the year. It means less work and bother later on.

On top of that, organizing your taxes throughout the year can help keep you on track for better tax efficiency. As summertime draws to a close, now is a great time to make a few tax moves to set you on the right path:

1. Organize Your System

If you haven’t organized your paperwork yet this year, now is the time to do it. Go through your receipts and documents, and straighten everything out. Create a file for your receipts, and organize your information as you receive it. Set it up so that you can find what you need, when it’s needed. You can even do it with paperless finances. Get organized now, and it will be much easier come April.

2. Evaluate Your Investments

Check your portfolio to determine your situation. While many people prefer to wait until the end of the year to sell losing investments, it doesn’t hurt to look through your portfolio and identify which investments no longer fit your goals. Figure out which investments might provide you with a tax advantage from a capital loss. You can sell now, or you can wait until later, but start thinking about how you want to proceed.

3. Make a Few Charitable Donations

Donate to charity all year. If you haven’t made your donations, or if you plan to make more, start doing so now. Take the time, now, to look ahead and start adding up where you can give to receive a tax deduction for your charity.

4. Give Gifts

This year (2012) is a great year to reduce your estate, if you have one. For now, the estate value exclusion is set to expire with the year (unless Congress acts), and the unified amount you can give as gifts, tax free, will also fall. It’s much more fun to give money away now, tax-free, when you can watch the recipients enjoy it. Right now, the amount you can give, total, is $5.12 million. You can give $13,000 to individuals, up to the limit. You can reduce your estate, and your heirs will enjoy more money — tax-efficiently.

5. Look for Other Credits and Deductions

As you consider the rest of the year, look at what other credits and deductions you might be eligible for. You can consult with a tax professional to find out what options you have, and especially which credits and deductions are set to expire soon. Plan now, adding up the possibilities. From business expenses (if you have them), to learning credits, to other tax breaks, look at how you can reduce your income, as well as reduce what you owe through credits.

This time of year is a great time to plan your tax-efficiency, and make moves now — throughout the year — to improve your situation.

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3 Responses to “5 Summertime Tax Moves”

  1. Jim M says:

    Good advice – But some of us need the threat of a deadline to get to work on this.

  2. Jerry says:

    I think summertime is the perfect time to go over your insurance policies to make sure you are properly covered and doing the things that will lead to the proper protection of yourself and your family.

  3. Brian says:

    Summer is also the last opportunity to finish up your 2011 taxes if you requested an extension back in April. And even if you’re just plain late, it’s a lot easier to get your taxes taken care of now before the IRS’s e-file service shuts down on October 15.


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