Reindeer Year-end Tax Tip Games 2012: Dancer says do a mock tax return
Friday, December 14, 2012
Welcome back to reindeer year-end tax tip games 2012.
Today's holiday themed tax tip (number two of nine) is coming to us from Dancer, who knows that most of us do some pretty fancy footwork when it comes to meeting our annual tax obligations.
And as one of Santa's long-time employees, Dancer also knows that you've got tons of stuff to do right now.
But our antlered friend says you need to add another task to your December list: Fill out a mock 2012 tax return.
Wait! Come back! Dancer and I promise this isn't as tedious as it sounds.
Just a framework: You don't have to be precise in filling out the forms. You just need to get an idea of where you stand.
And you have most of the info, or a close approximation of it, at hand.
First, dig out last year's tax return. Do you expect to essentially plug in the same info this time on your 2012 return? Great. If not, note what's new -- you welcomed a new family member maybe -- and how it might affect your coming tax bill.
Check your latest paycheck stub for your year-to-date income and withholding data. If you have another check coming this month, just add in what those amounts will be.
Head to your computer for data on your tax-related accounts. If you haven't already, set up online access to your mortgage company and investment accounts. There you can find out how much tax-deductible interest you've paid so far and how much your savings accounts and mutual funds have paid you this year.
Then plug that data into the Internal Revenue Service forms -- here's the draft Form 1040; the tax agency is waiting, just like everyone else, for Congress to finish its job so 2012 tax material can be finalized -- or into your tax preparation software.
You don't have filing software yet? No problem.
Check out the companies' Web sites and set up an online tax prep account. In some cases, online filing is free. Even if it isn't, you don't have to pay until you file. Take advantage of that to begin your tax return so you can get an idea of what to expect.
If you decide you like the online software, you've got a head start for when you are ready to officially file your 2012 taxes.
Knowing now instead of being surprised: By doing a tax dry run, you can see whether you're going to get a refund. If you are, you'll want to file as early as possible next year.However, if your rough tax numbers show that you'll owe, then you still have some time left to deal with that.
You can adjust your withholding for the next paycheck or so.
Or plan to contribute to a retirement account that might be deductible -- you have until April 15 to do so -- such as a traditional IRA or self-employment account.
Or make a few more expenditures, medical or miscellaneous, to help you get over deduction thresholds.
And even if there's nothing you can do to drastically cut your tax bill now, at least you know you'll owe and can start looking at how you will pay Uncle Sam.You also might find these items of interest:
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