The 2014 tax season has come and gone. With another tax season in the books, it is important to reflect on what happened and identify the key takeaways to help identify ways to plan and prepare for next tax year. While this tax season was as chaotic as the shortened tax season of 2013, there were some key tax takeaways from this past tax season.
-One of the biggest mistakes taxpayers make is not making estimated tax payments throughout the year when it is necessary. This generally occurs when a taxpayer has a side business that is not being taxed throughout the year. It is important to perform a tax projection and make estimated tax payments throughout the year so there aren’t any surprises, penalties, and large payments to be made when taxes are due.
-There are many deductions and credits that have phaseout and income limitations that taxpayers missed out on due to improper tax planning. These phaseouts and limitations vary greatly and are based on your gross income or adjusted gross income. It is important to understand what these are and how they affect your tax position. There is some tax planning to undertake in order to make sure you get the benefit of these deductions and credit or at least know upfront that they do not apply to you.
-New tax laws tripped up many taxpayers. Whether it was making the adoption credit nonrefundable or the additional tax on investment income, there were a number of tax law changes that took place that caught taxpayers off guard. It is important to have an understanding of the tax law changes and how they impact your particular tax situation.
All three of the tax takeaways from tax season highlight the need of having a qualified tax professional help you with your taxes. The tax code is complex and has far reaching impacts to each person’s individual tax situation. Failing to understand the tax code impacts of your tax situation can result in unfavorable outcomes.