Treating tax time as an opportunity

Andrew S. Lattimer

Thomas Krywinski

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By Andrew S. Lattimer and Thomas Krywinski

With just a short time to go before Tax Day on April 18th, many people now find themselves laser-focused on preparing their income tax returns for themselves, their families or their organization. It can obviously be a deeply involved process, filled with nuances, possibilities and challenges filers have perhaps not yet thought about. Research and attention to detail should be a priority.

Why should people be so strategic and involved, particularly on something that happens once a year and so often seems so routine? That's exactly the reason they should — because Tax Day only comes once a year, to make sure your filing is done in a way that makes it most beneficial to you.

Treating tax filing as a priority could mean a better return for a business owner in terms of potential savings and deductions.

Tax filing season is an opportunity and should be treated as such. With that in mind, here are some tips that can allow filers to do just that, tips that are never too late to put into practical applications.

Organization is essential — This may seem quite obvious, but a good tax filing starts with proper organization. Make sure you have all your necessary paperwork in a row, whether you are preparing a tax return yourself or having it prepared professionally.

Make sure all pertinent receipts are accounted for, particularly receipts for charitable contributions.

Be certain that non-cash contributions are considered —proper documentation will give filers peace of mind in knowing that every box has been checked, and could save you some difficulty down the line.

Be mindful of all potential deductions — Here is the part where you can really start saving some money — there are numerous deductions made available every year to filers that were created to provide relief; the problem is many simply do not know about them. That's why you need to ask the right questions and do the right research.

Ask yourself each of these questions, and possibly others, when it comes time to thinking about potential deductions:

• Did you install any energy-efficient equipment (i.e. water heater, windows etc.)? If so, there are ample tax deductions available that could bring impressive savings.

• Have you considered education expenses and accounted for them? Tuition, college savings accounts, student loans — there is vast potential for savings here. Consideration should also be given for dependent education expenses and who should claim them.

• Did you capture all your real estate and personal property taxes paid?

• Do you have any foreign investments?

Managing your refund — For those fortunate enough to receive a refund – or perhaps more to the point, for those whose careful organization and consideration of all potential deductions has led them to a refund — this becomes a cash infusion that needs to be managed as well.

For starters, it is good advice to always use direct deposit rather than asking for a paper check. It's a modern convenience, but it's also a more secure way of receiving money, and direct deposit will enable your refund to arrive faster.

And once the money is in your account, there is still more planning that can be done. Should it be invested? Should it be put back into a business?

Remember the importance of Tax Day on April 18th. Every filing brings opportunities.n

Andrew S. Lattimer, CPA, and Thomas Krywinski, CPA, are partners with West Hartford-based accounting-consulting firm BlumShapiro.

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