“I will pay less tax” may sound like a good New Year’s resolution, but it may not be possible in 2013... Besides, resolutions should be manageable and concrete. Here are six that will save you money in 2013 and beyond.
1. I Will Consider Taxes Before Signing Agreements: Most agreements you sign in business have a tax angle. Many in your personal life do too. Settlement agreements resolving litigation, a sale agreement for a company or real estate, a lease for office space, an option to buy property, or a license agreement to use property can all have a tax impact. Consider taxes before signing and negotiate what you can.
2. I Will Pay Attention to Every Form 1099: Each one of these slips of paper bears your Social Security Number and will be matched to your tax return. Their importance is increasing. It’s almost January when the ubiquitous forms show up in the mail so get ready. Pay attention to these forms–the IRS does.
3. I Will Keep Good Records: Good records make any tax matter vastly easier. Keep proof you timely mailed returns, protests, correspondence, etc. So you can prove when you sent it, send it certified, FedEx or other approved provider that proves timely mailing and receipt.
4. I Will Consider Taxes Before Hiring “Independent Contractors”: Few consumers consider whether the plumber doing a one-time task is an employee or independent contractor. But if you’re in business and have continuing relationships with workers, consider whether an independent contractor relationship will stand up. 2013 could be a big year for reform.
5. I Will Handle Tax Notices Promptly: Many tax lawyers and accountants find that many clients do not deal with problems promptly. Often, tax professionals could achieve a better result if they were brought in earlier. Whenever possible, be prompt. When you need an extension, get it in writing.
6. I Will Run Numbers: Often, there’s no way to know if you’re getting a tax benefit from a deduction without running numbers. Whether you prepare your own return or have a preparer, running numbers will help you make better and more informed decisions. Multiple scenarios are especially helpful with AMT.
Whatever your New Year’s resolution, 2013 promises to be a year with major tax developments.
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