October Tax Reminders And To-Do’s
Telling Tips is a series of articles from local experts to help you save money, make better decisions and plan for a better future.
It’s October, and even though there are 178 days between now and April 15, it’s never too early to mark your calendar so you can always be a step ahead with your personal finances and this year’s tax preparations. Here are a few reminders:
Reminder #1: Let’s party! Happy [belated] birthday, Income Tax (October 3, 1913). Click here to see the first tax return.
Reminder #2: October 15 marks the official end of the 2012 Tax Return Filing Season. Don’t lose the protection the extension gave you. There are only a few days left, so if you haven’t submitted your information, better do it immediately. Also, remember that October 15 is the 2012 deadline for retirement plan contributions for sole proprietorships, including SEPs. Are you a tax procrastinator? All is not lost. You can start procrastinating again in April.
Reminder #3: Need extra money? Check for your lost money for free. (Some companies charge $35-$100 to do this).
Reminder #4 – Workplace Enrollment Time: If your company offers these benefits, it is now time to enroll into the flexible spending accounts (FSA). These benefits include the pre-tax contributions for child care of up to $5,000, and the medical FSA, of up to $2,500. You choose the contribution amount, and the money is withdrawn from your paycheck and directed into your FSA account.
Reminder #5: Recently Married or Divorced? If you are changing your last name, or hyphenating it, let the IRS know by filing form SS-5.
Reminder #6 – Trick or Treat: Even if you don’t go out to trick-or-treat, you may want to watch some of those terrifying movies, such as “Young Frankenstein” a.k.a. “My Neighbor’s Kid,” or “Gremlins” a.k.a. “The In-Laws.” Remember, however, there are real tax terrors like preparing your return on your own, making mistakes, overlooking deductions, ending up with a big tax bill, confronting an IRS bill so big you can’t pay it, getting audited, and hiring a bad tax pro. If you encounter any of these, keep in mind that you can defeat these tax ghouls. Call me at the number below to find out how.
Reminder #7 – Don’t Get Scammed: According to the FDIC, fraud artists commonly use well-known bank names and logos in emails, which ask recipients to click on a link that will take you to an unauthorized site. If you want to access your bank’s website, don’t click on a link in an email. Instead, type in the web address or add the URL as a button to your browser.
Reminder #8 – What’s in Your Wallet? Never carry: your Social Security card or birth certificate; every credit card you own; spare house key; your PIN codes. Today, make a photocopy of everything in your wallet, just in case.
Reminder #9 – Advance Directives: A must for everyone in all states. (For New York State).
Reminder #10 – Insurance Check-Up: Visit two agents and get quotes on new or existing policies: health, life, property, auto, etc. Keep your current insurance broker honest.
Reminder #11: Pay off any credit card balances that run up over the summer. How?
1- Make a budget so you can see how much money is coming in and going to each month. This will show you how much you have to pay down your debt.
2- Pay your major obligations first.
3- Pay off your debt with the least favorable terms/highest interest rate. Which debt has the highest interest rate? Is it fixed or variable, and is the interest something you can deduct from your taxes? For example, mortgage interest rates can be but car loan interest rates cannot.
Any extra money in your budget should go to paying off the worst interest rate, not the highest amount of debt. Once you have this debt dealt with, you can apply the money you were using to the debt next on your list.
Reminder #12: Avoid late-year purchases of mutual funds in taxable accounts. You don’t want to pay heavy taxes on something you’ve only owned for a short time.
Quip: An accountant was driving along the road when all of a sudden he has to swerve to avoid a box falling off the truck in front. Seconds later a policeman pulled him over for reckless driving. As the policeman starting writing the ticket he noticed the box was full of nails and tacks.
“I had to serve or I’d have run over those and blown my tires!” protested the accountant.
“OK”, replied the officer, ripping up the ticket, “but I’m still bringing you in.”
“What for?” the accountant demanded to know.
The policeman responded, “Tacks evasion.”
Joseph Reisman, of Joseph S. Reisman & Associates, has been serving tax prep and business accounting expertise from his Coney Island Avenue office for more than 25 years. Check out the firm’s website.