Even though now is the time you are probably getting everything ready to file your 2006 taxes, now is also the time to be doing the planning for 2007. Here are some ideas to consider when making your plan for this tax year:
1. Start a filing system for keeping all your receipts and other tax related documents. This doesn’t have to be fancy, but it does need to be organized. Use file labels to separate documents which keeps them easier to find when you are actually preparing your taxes. What do you need to keep? Charitable donation receipts, property tax receipts, stock purchases and sales documents, home equity loan information, paperwork from the purchase or sale of a home, and medical receipts to name a few.
2. Make the decision to give to charities. Your donation can be in monetary form or in physical items. This is a great way to help others while getting rid of the stuff that you have not used in years. Do not forget to get a receipt for tax purposes and put it in the appropriate file that you made in item #1.
3. Start an IRA or invest more in your 401k. Begin investing for your future retirement and take advantage of not being taxed on that income.
4. If you have children consider starting a 529 college plan for your child’s future education. You can deduct up to $4000 for joint filers. See Clark Howard’s web site for tips on 529 college plans.
5. Review your W2 now and periodically throughout the year to make sure you are having withdrawn the correct amount of tax. Remember you do not want too much taken out because you are giving the government an interest free loan on your money. However, if you take out too little, you could be hit with a huge amount of tax that you would owe at tax time. Turbo Tax has a good feature for helping you determine what is the correct amount to take out each pay period.
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