6.       Don’t Procrastinate.

Many taxpayers let their tax preparation hang over their heads until the very last moment. Why wait for crunch time to prepare and review your information? Plan several months before the year-end to visit with your financial professional to discuss your situation and review your recordkeeping. If your tax records are systematically organized and all of your receipts are coordinated, you will save a lot of time when it comes to preparing and filing your return. The IRS suggests in their literature that you review your income, deductions and tax items from the prior year’s return as a potential way to make sure you have not missed anything for this year’s return.

5.       Double-check All Of Your Math And Data Entries.

Many times even the best of us can transpose numbers when handling numerous calculations. The IRS encourages you to even check to make sure you have a full and legible Social Security number for everyone on your return because if the Social Security numbers for your dependants are incorrect, you may get challenged.

4.       Not Adjusting Withholdings When You Change Jobs.

When switching to a new job, you have the opportunity to review your overall tax withholding strategy, particularly if your income will change. Talking with your financial professional allows you to make an intelligent decision about adjusting your federal income tax withholdings as well as your state withholdings. By revisiting your choices, you can avoid any unpleasant surprises at tax time.

3.       Failure to Accurately Track Year-to-Year Carry-over Items.

All taxpayers should check to see if they have any capital losses that could possibly offset current capital gains. Excess amounts of unused capital losses can be carried over to the next year’s return. For example, if you have net capital losses in a prior year in excess of a $3,000 annual deduction limit, they can be carried over to your next year’s income tax return. The same thing goes for any charitable contributions and unused business credits that you can’t deduct in a previous year because of limits on such write-offs. While you still need to monitor AMT considerations, don’t let these carry-over’s get lost in the paperwork. They can potentially save you money.

2.     Not Maximizing Your Retirement Plan Contributions.

Whether it is a 401(k) plan, SEP plan or individual IRA, all taxpayers should take a look to see the advantages of using any tax deferred saving vehicles available to them for tax reduction strategies.

Remember, not all retirement contributions are deductible. For example, you wont get any tax break for a contribution to a Roth IRA, but your investment can accumulate tax-free and your earning and contribution withdrawals can be accessed tax free if you’ve had the account for at least five years and the distribution is made after you’ve reached age 59½. This can be a very strong strategy that should be considered by all taxpayers.

1.                  Ignoring Eligible Tax Deductions.

Taxpayers are eligible to deduct certain charitable contributions. Unfortunately, many people do not plan well and miss out on these deductions. While you may not think that the items that you give to charity have much value, you can research how much these items actually sell for to determine what you can claim. Keep in mind that the tax law says that taxpayers cannot deduct anything unless the donations are in good condition or better and receipts may be necessary as back-up or proof.

Another trap for taxpayers is not keeping track of out-of-pocket expenses that are associated with a charity. For example, the cost of stamps you buy for a fundraiser or the cost of food that you prepared for a donated meal or the cost of supplies you donated to a charitable organization can be fully deducted. In order to deduct these expenses from your tax return you need to keep track of them and then total those deductions.

A good tax preparer can determine whether or not you can deduct home office deductions and/or potential vehicle deductions if you own your own business or work out of your own home.

A good strategy to use is to look at your annual checking account transaction register and create a list of potential overloaded deduction items from the previous year and talk with your financial planner and tax advisor. Make sure you carefully track those deductions you wish to use. This will help when filing tax forms.

Despite all of the news we have heard about tax simplification, the current tax code still remains a complex combination of regulations, statutes, rulings and forms that are written primarily in highly technical language and cover thousands of pages.

Each year, several of the sections that calculate for certain information taxpayers report get adjusted. Rule changes can often be sorted by eligibility and the amount of exemptions, deductions and tax credits available for taxpayers can be phased in and out by formulas.

Most taxpayers are best served by using a qualified tax professional to either prepare or review their tax returns. A financial planner can help by providing tax planning strategies that often might be overlooked.

Over the next 6 days we will outline 6 potential tax strategies you can use to save money!