13 tax moves to make now

Source: Benzinga.com

How to get organized for the tax year ahead

By Eva Rosenberg, MarketWatch

Last Update: 7:31 AM ET Jan 10, 2014

Last year, Congress was so contentious in so many areas that legislators didnt put much energy into personal-income-tax-related issues. So I wouldnt hold out too much hope theyll pass many of the so-called extenders on expiring provisions they usually do in January. On the plus side, that means it will be easier to make our new years tax resolutions for 2014.

Start with a checklist. Dont you love the feeling of closure you get each time you check something off as completed? Consider posting this checklist on the refrigerator door with a fun magnet.

January tax to-do list:

Set up your 2014 tax file. Reach for your handy-dandy label maker. Make 2014 labels on file folders or an expandable file, so you have a specific place to store your 2014 records and receipts. Or pick up a good scanner with document organizer software. Scan documents as PDF files to ensure they are still accessible to software three to six years from now. Oh, and make sure each document is clearly legible after scanning. Once youre sure, you can discard the original paper.

Set up your 2014 tax calendar. Individuals can use IRS Publication 509 to pinpoint deadlines for the year. Businesses have the IRSs Small Business Calendar showing the 2014 due dates. Its available in English or Spanish. This years calendar contains links to education for small businesses and tax professionals.

Update your address. If you have moved during 2013, update your address with everyone who will be sending you tax-related documents: Former employers (W-2s), banks (1099-Int), lenders (1098), brokerages (1099-DIV, 1099-B), the IRS, your state tax agency, clients (1099-MISC), investments (K-1s), trusts (K-1s), and the like. A note to homeowners using a P.O. Box or non-home address to receive mail: Do something to establish your home address as your principal residence update voter registrations, drivers license addresses, or whatever, to prove this is your residence.

Update your name. New brides generally remember to change their names on drivers licenses and paychecks, but often forget to notify the Social Security Administration. You wont be able to e-file your tax return with your new name if it doesnt match the Social Security Record.

Get Social Security Numbers or ITINs. Do you have a new baby? Did your spouse get a Green card? Do you have non-resident dependents? File applications for their ID numbers now. It can take months to get them issued. Use Form SS-5 to get a Social Security Number. Use Form W-7 for ITINs. To speed up the process, get a certified acceptance agent to help you.

Get a special IRS PIN. Tax identity theft was a huge problem last year. Were you a victim? Contact the IRS and have them issue you a special IP PIN (identity protection personal identification number). Notifying the IRS about the identity theft will flag your account. Once the IP PIN is issued to you, no one will be able to file a tax return under your Social Security Number and generate a phony refund.

File a new W-4 with your employer. Update your withholding so you dont find yourself short next year. And theres no reason to get a large refund. Why give the government interest-free use of your money for a year? Use the IRS withholding calculator to help you determine the correct amount to withhold.

Use up your medical Flexible Spending Account (FSA). If you didnt spend enough money on medical care to get all your FSA deductions back last year, you might still have some time. Some plans are set up to give you until March 31 to get the medical care and the related receipts. That means you can still get medical treatment during these three months. Turn in your receipts from your doctors, dentists, clinics, therapists, pharmacies, and other health providers immediately. Naturally, when getting reimbursed by FSA plans for these costs, you may not list them as itemized deductions.

Make your fourth-quarter estimated tax payment. Jan. 15 is the due date for the fourth-quarter estimated tax payment for 2013. Who needs to pay? Folks who have investment income, unemployment income or any freelance income. Self-employed folks with business profits over $400 will owe self-employment taxes, even if no income taxes are due.

Some to-dos for businesses or household employers:

Send out W-2s. Have you been paying household employees? Although the IRS has a sort of shortcut (Schedule H) for reporting and paying taxes for those workers, youre still responsible for sending them a W-2 in January. Your state will require full, year-end payroll tax returns.

Send 1098s. Folks collecting payments on private mortgages or loans must send out Form 1098 reporting the amount of interest paid by their borrowers. Even if you dont send the form to your borrower, your borrower will be reporting the interest paid to you on Schedule A.

Send 1099-MISC. Send Form 1099-MISC to anyone who was paid $600 or more during the year for services. Dont send it to vendors who supplied merchandise or supplies just service providers. Dont send 1099s to corporations, except attorneys and medical care providers. When a company operates as an LLC, you dont know whether or not they are filing as a corporation. So, get a Form W-9 from each vendor before you issue the first check to them each year. Have them tell you their status.

Consider these tax resolutions for 2014:

  1. I resolve to pay no more than my share of taxes.
  2. I resolve to pay no penalties and interest this year.
  3. I resolve to take advantage of every tax credit and deduction legally available to me.
  4. I resolve to read MarketWatchs columns year-round.

More stories from Eva Rosenberg:

Last-minute tax tips for 2013

What Obamacare means for your taxes

Does Uncle Sam tax lemonade stands?

Note: links have been removed from this article.

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