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Tax
Tip of the Week
For the
week of August 2, 2004
It's time for a six-month tax tune-up
We’ve now reached the mid-point of the year and it’s a great time for a tax tune-up. With six months’ income and deductions under your belt, you should be able to make a fair estimate of your financial picture for the full year. By reviewing and making adjustments now, you have time to avoid unpleasant year-end tax surprises.
Sit down with last year’s tax return and your financial records through June 30. In each major category, compare your 2004 numbers with 50% of last year’s total. Here are some tips on what to look for:
- Income. If wages or self-employment earnings are significantly different from last year, how will your tax liability change? Check whether your income level is likely to push you over the threshold for any tax breaks. Are there actions you should consider to reduce your 2004 taxable income?
- Investments. Do you have unusual gains or losses? If so, consider offsetting gains or losses with other investment sales as part of your strategy.
- Deductions. Has there been any major change in your itemized deductions? For example, mortgage refinancing can reduce interest deductions. You may want to increase other discretionary deductions if it still pays to itemize.
- Retirement contributions. Are you on track to maximize your contributions to tax-favored plans? Have you made IRA contributions for 2004?
- Flexible spending accounts (FSAs). If your employer provides an FSA, are you spending enough to use up all your contributions?
- Taxes withheld. Do your tax payments seem in line with income, relative to last year’s levels? If not, consider changing your withholding or making estimated tax payments.
If you have questions, or if you would like help with your tax review, please
contact
our office.
"Tax
Tips" are published weekly to provide useful tax
information. Return to this site every week for helpful
tax-cutting suggestions, tax reminders, and current tax
information.
The
information contained in this site is of a general nature
and should not be acted upon in your specific situation
without further details and/or professional assistance.
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