With more than two decades of experience in accounting and tax preparation with his most recent leadership roles in various industries as Chief Financial Officer (CFO) and Vice President of Finance, Tommy Diaz has extensive leadership and technical experience assisting clients with individual and business tax preparations. He holds degrees in Accounting and Finance and is a licensed certified public accountant. Tommy performs CFO related services including accounting, budgeting and forecasting, and financial statement preparation for small and mid-size businesses, working with clients to meet and improve their debt covenants with financial institutions and lenders.
We asked Tommy to share helpful and important, end-of-year tax tips with us.
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Tommy's End-of-Year Tax Tips:
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If your employer offers a 401(k) or other retirement plan, look at it as an opportunity to put away your money before it’s taxed. Just as important, if your employer matches your contributions, make it a priority to meet the match. It’s an opportunity to double your money.
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It’s easy to brag when you get a big refund check, but what that really means is you’ve been lending the government money interest-free for the year. Work with your employer to adjust the amount withheld from each paycheck so it more accurately reflects the taxes you’ll need to pay at the end of the year. The IRS offers an online calculator to help you fill out the W-4 form your employer uses to figure out how much to withhold from each paycheck.
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Whether you’re driving for a ride-sharing service once a week or occasionally freelancing, you’ll need to pay taxes on any self-employment income. Unlike your regular paycheck, taxes aren’t withheld, which requires extra planning and record-keeping on your part. In many cases you’ll be expected to pay taxes quarterly rather than paying it all at the end of the year or you may face penalties when you file in April. However, you may be able to deduct many expenses related to your side job. Unless you have a large number of deductible expenses, it makes more sense to take the standard deduction ($12,550 for individuals or $25,100 for married couples filing jointly in 20212). But if you have a mortgage, state and local taxes, large medical bills or self-employment expenses, you may have enough deductions to justify itemizing. It’s not just the big-ticket items, though. Charitable donations, home efficiency improvements, job hunting and self-employment expenses can be deducted if you itemize.
- Be sure to keep all receipts and records so you’ll be able to calculate accurately when it’s time to do taxes and back up your deductions if you get audited.