San Mateo, CA (PRWEB) January 16, 2008
With the New Year underway, Andrew Housser, co-CEO of free online consumer finance portal Bills.com, has seven steps Americans can take to make the most of their 2008 tax planning.
"As you start to see how your tax picture fared in 2007, it is a great time to make 2008 an even smarter year when it comes to your personal finances," Housser said.
These seven steps can get individuals started:
1. Take a baseline measure. Review tax changes for 2008 and make plans accordingly. For instance, the deduction for mortgage-insurance premiums on mortgages taken out after 2006 that was due to expire at the end of 2007 was actually renewed by Congress at the end of December. Other tax credits and deductions also come and go. Understand the current situation before making plans.
2. Make good on past tax debt. "Some Americans avoid looking at their tax bills -- or in some cases, paying them -- for years on end," Housser said. "If you are liable for back taxes, the time to remedy the situation is NOW. The Internal Revenue Service is becoming more and more diligent about following up on back taxes." A tax advisor and/or or debt resolution expert (try http://www.freedomfinancialnetwork.com) can help. Those who are unable to pay may be eligible for various solutions, such as offers in compromise or other negotiations with the IRS.
3. Correct withholding. A big refund means taxpayers succeeded in not owing the IRS -- but it also means they're giving the IRS an interest-free loan by having too much withheld in taxes. Those who owe a bundle should rework withholding forms or make quarterly estimated tax payments -- now.
4. Plan for flex spending. Early in the year -- if not sooner -- employers ask employees to update their information for flexible spending accounts. "Review last year's health costs if you have a flexible spending account for health expenses, and anticipate anything that will change this year," suggested Housser. "If you budgeted for LASIK surgery last year, for instance, do not have the same amount withheld this year." Do the same for child care. If Junior is headed to first grade in the fall, child-care expenses will tumble. Do not lose cash by having too much withheld -- and do not miss out on benefits by withholding too little.
5. Plan to save for retirement. Each year, retirement plan funding limits rise. With inflation, the deductions apply to slightly higher income levels. "Know where you stand, and if at all possible, maximize your investments for your later years," Housser said.
6. Plan a giving strategy. It can feel like part of the holiday spirit to dash off checks to every organization that asks in December, hoping to add to deductions. But a mad dash at the most expensive time of the year isn't in anyone's best interest. Make charitable donations part of a monthly budget. Set an annual target, divide it by 12, and give each month. Don't neglect to get a receipt, required for taking a tax deduction for contributions to qualified organizations.
7. Personalize. If a certain tax issue tends to surprise you every year, make a note of it this year and resolve to correct the problem before next year.
"Nothing feels better than starting a fresh, new year with your financial life in place, and taxes are an important part of that scenario," Housser concluded. "By taking some time to plan for 2008 while the year is young, you'll give yourself a New Year's gift of peace of mind -- at least until the next tax season rolls around."
Based in San Mateo, Calif., Bills.com is a free one-stop online portal where consumers can educate themselves about complex personal finance issues and comparison shop for products and services including credit cards, debt relief assistance, insurance, mortgages and other loans. The company blogs about consumer finance issues at http://www.bills.com/blog. Since 2002, Bills.com has served more than 30,000 customers nationwide while managing more than $500 million in consumer debt. Bills.com is a division of Freedom Financial Network, LLC, whose co-founders and CEOs, Andrew Housser and Brad Stroh, have been named Northern California finalists in Ernst & Young's Entrepreneur of the Year Awards.