Ready or not, tax sea­son is upon us

GA Voice - - Newsbriefs -

By MERCEDES M. PASQUALETTI, MBA Tax and Gen­eral Man­ager, HLM Fi­nan­cial Group

Yes, it’s that time of year again. A whole year has flown by, mak­ing to­day the per­fect time to start pre­par­ing for the time-hon­ored tra­di­tion of fil­ing your tax re­turn.

The eas­i­est place to start is by com­pil­ing a list of the things you need by look­ing at the type of in­come and ex­penses re­ported on your re­turn from last year. If your fam­ily or em­ploy­ment sta­tus has re­mained the same, last year’s re­turn may con­tain clues to the state­ments and in­for­ma­tion you need to watch for this year. Af­ter re­view­ing last year’s tax re­turn, bring it with you to your tax ap­point­ment. Your pro­fes­sional tax pre­parer can spot things on the re­turn that you may have over­looked. If you are us­ing a pro­fes­sional, they may have soft­ware that can pro­duce a tax or­ga­nizer. This will have a list of the doc­u­ments you used last year to pre­pare your tax re­turn.

Next, gather all the in­come state­ments you re­ceived. This in­cludes all your Forms W-2, Forms 1099, and Sched­ule K-1s for tax­pay­ers who are own­ers of an S cor­po­ra­tion or a part­ner­ship. A Sched­ule K-1 is also is­sued to tax­pay­ers who re­ceived in­come as a ben­e­fi­ciary of an es­tate or trust. Of­ten, the Sched­ule K-1 is not mailed un­til later in the fil­ing sea­son, so if you are ex­pect­ing one of these, wait to re­ceive it be­fore you file.

Other in­come items may in­clude prof­its from sell­ing an as­set, such as stock, or any other in­come-pro­duc­ing property you own. It’s im­por­tant to know how much you paid for the as­sets, how they were ac­quired, and when they were ac­quired. Only the profit is tax­able. If you sold a pri­mary res­i­dence, the gain may or may not be tax­able. If you can’t de­ter­mine the cost of an as­set, the In­ter­nal Rev­enue Ser­vice (IRS) will as­sume it is zero. This re­sults in the en­tire gain be­ing tax­able, and you will wind up pay­ing more in taxes than nec­es­sary. If you sold any of the items above, it would be good to meet with a tax con­sul­tant to de­ter­mine if there are any tax-sav­ing strate­gies to im­ple­ment prior to De­cem­ber 31, 2016.

Be care­ful not to over­look any med­i­cal ex­penses, property taxes, mort­gage in­ter­est, em­ployee busi­ness ex­penses, and char­i­ta­ble con­tri­bu­tions. Bring in all the ex­penses you in­curred dur­ing the year, along with doc­u­men­ta­tion show­ing when you paid them. If you made char­i­ta­ble con­tri­bu­tions of $250 or more at a time to one or­ga­ni­za­tion, you must ob­tain a state­ment from the char­i­ta­ble or­ga­ni­za­tion be­fore your re­turn can be filed. You must also have writ­ten doc­u­men­ta­tion (such as re­ceipts or can­celed checks) of all cash do­na­tions, re­gard­less of the amount. Other de­ductible ex­penses in­clude mov­ing ex­penses, ca­su­alty losses, and costs in­curred for the care of your chil­dren while you work.

If your tax sit­u­a­tion changed dra­mat­i­cally through­out the year, it is a good idea to meet with a tax con­sul­tant prior to year-end to en­sure you have cov­ered all your tax bases. There are strate­gies to put into play prior to the end of the year to help you save tax. For ex­am­ple, if you sold highly ap­pre­ci­ated The tax pro­fes­sion­als at HLM Fi­nan­cial Group say to start on your 2016 taxes by com­pil­ing a list of things you need by look­ing at the type of in­come and ex­penses re­ported on your 2015 re­turn. (iStock photo) stock, but have other stocks in a loss po­si­tion, it would be a good idea to off­set some or all of the gain by sell­ing some of the losers. If you item­ize, it is pos­si­ble to trans­fer highly ap­pre­ci­ated stock to a char­ity and avoid the gain as well. Tax strat­egy is very com­plex and the right pro­fes­sional should be able to as­sist you in min­i­miz­ing your tax bur­den. The best way to ac­com­plish this is to meet prior to year end as the op­tions are greatly re­duced af­ter the end of the tax year.

Whether you pre­pare the re­turn your­self, or hire a pro­fes­sional to do it for you, be­ing or­ga­nized pays off. A pro­fes­sional tax prac­ti­tioner can help you sort through the mounds of pa­per you have gath­ered and look for in­for­ma­tion that will al­low you de­duc­tions un­der the new rules.

If you would like as­sis­tance with proac­tive tax man­age­ment, give HLM a call at 404-836-1120. HLM is cel­e­brat­ing 30 years of busi­ness and would like to thank the com­mu­nity for your sup­port for the past 30 years!

Novem­ber 11, 2016

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