As the summer comes to a close we find ourselves at a transitional point in the year. The kids are trading in their swimsuits and long days at the pool for backpacks, school supplies, and sack lunches. I know with the temperatures hanging out in the 90's and 100's it's hard to believe, but fall will be here before you know it. As this transition in the year happens, it also presents a good opportunity for people to do a little mid-year tax planning. Below I have listed out a few things to consider as we enter the last five months of the year.
Clean out your closet
Take a look at your closet right now. Do you see anything hanging up that you haven't worn all summer? Maybe since last summer? This is a great chance to go through your closet and bag up any clothes, shoes, and accessories that you feel comfortable passing along to a new owner. Put all those clothes in a box or a bag and drive them down to your local charity (such as Goodwill) and make your donation. Don't forget to get a donation receipt, fill out your personal information, list your donated items and assign a conservative value to them.
Look at your FSA and HSA balances
There are five months left in the year. But in those five months, you will probably go to the doctor and the dentist at least once, maybe the eye doctor, and possibly have to fill a prescription. If you have sporty kids at home, you'll probably also been spending some time getting physicals for their various activities. If you participate in an FSA, HSA, or flex spending account with your employer, this is a good time to see what your balance is, how much you expect to contribute for the remainder of the year, and compare that to your expected expenses. Remember, in most of these plans you have to use it or lose it.
Amended tax info
Is there an ominous envelope sitting on your counter at home with the words "IMPORTANT TAX INFORMATION ENCLOSED" that you haven't had a chance to open? There's a good chance it is from your investment broker with corrected tax reporting information regarding your investments. Or, it could be from your mortgage company discussing private mortgage insurance premiums. Either way, you should take a look and discuss with your tax preparer to see if you need to amend your tax return.
Changes in tax situation
Has 2013 been a year of change for you? Maybe you bought your first (or third) house, maybe you had your first (or third) kid, or maybe you got nervous and sold a big part of your investment portfolio to avoid the ups and downs of the market. All of these changes could have an impact on your 2013 tax return which could result in you getting a big refund or having a big balance due in April 2014. To avoid this, talk with your tax preparer about the changes in your situation, your year-to-date withholdings from your paycheck, and any estimated tax payments you might have already made.
Get up to date
The "fiscal cliff", "Obamacare", QE3, DOMA...there has been a barrage of news stories about all of these topics and you probably find yourself saying "I feel like this should affect me somehow?" Well your intuition is correct. For example, if you expect to make at least $250,000 this year, or you have significant income from investments such as interest, dividends, capital gains, partnerships, etc., or you are a small business owner with employees, then you are right in the crosshairs of several of these changes. Touch base with your CPA to discuss your situation and consider any planning moves you can make in the closing months of the year.