PAC Member Offers Tax Planning Tips
May 18, 2017


Maintaining updated records throughout the year can make income tax return preparation less painful. If you maintain multiple accounts at various financial institutions, keep one list of the banks and account numbers. When closing an account, make sure the bank has your current address to ensure you receive a 1099. Keep the last statement handy in case a 1099 is not correctly issued. Label envelopes at the beginning of each year to keep receipts for tax deductions such as charitable donations, taxes paid, etc.

If you receive a notice from the IRS or Franchise Tax Board (FTB), act on it quickly. It is difficult to contact taxing authorities, so you may want to consider accepting the adjustment and paying the notice amount to avoid frustration. If you do contact the IRS or FTB, have with you the notice, applicable tax return and items necessary to discuss the issue. You may need to fax or mail support to the contact person to confirm your conversation. After resolving a notice, determine if any other tax returns or years will be impacted by the notice.

Make sure your sources for tax planning are reliable. Many articles on the internet are simply an opinion versus fact. Before making a financial decision, check with your tax advisor. A decision can create a domino effect negating the expected results.

Some investments include contracts, such as annuities and life insurance. Understand the current and future tax consequences before signing the contract. What is the cost for canceling the contract before maturity? What is the expected overall return? What happens on death? What are the tax consequences should you decide to gift it?

At the beginning of each year, record important dates on your calendar for your tax return. Such dates include income tax payment due dates, gifting, drawing required minimum distributions and/or maturity of a CD. At the end of the year, the calendar can be a great resource of information for tax planning.

More than likely we will see federal tax changes this year. The expect- ed changes include reduction of tax rates, limitations on certain itemized deductions, elimination or adjustment to estate tax, as well as increased tax savings for two-earner families with children. Until these changes are enacted, it will be difficult to determine the financial impact to taxpayers. Keeping organized and updated records throughout the year will make it easier to do tax planning once the new laws are enacted.