Norman Grill: Plan now to save on next year's taxes

Now is the smart time to plan next for year’s taxes. An early start enables you to make adjustments that may save you money — maybe a lot of it. Once the tax year ends, there are fewer tax-reduction moves you can make. With that in mind, here are five things you can do now to make next April 15 easier for everyone.

1. Review your paycheck. Make sure your employer is properly withholding and reporting retirement account contributions, health insurance payments, charitable payroll deductions, and other items. These payroll adjustments can make a big difference to your bottom line. Fixing an error in your paycheck now gets you back on track before it becomes a huge hassle.

2. Adjust your withholding. Why wait another year for a big refund? Now is a good time to review your withholding and make adjustments for next year, especially if you’d prefer more money in each paycheck this year. If you owed money at tax time, perhaps you’d like next year’s tax payment to be smaller.

3. Organize your recordkeeping. Establish a central location where everyone in your household can put tax-related records all year long. Anything from a shoebox to a file cabinet works. Just be consistent to avoid a scramble for misplaced mileage logs, or charity receipts come tax time.

4. Store your 2020 tax return in a safe place. Put a copy of your 2020 tax return and supporting documents somewhere secure so you’ll know where to find them if you receive an IRS notice and need to refer to your return. If it is easy to find, you can also use it as a guide for next year’s return.

5. Consult a tax professional early. Due to the ever-increasing complexity of tax laws, it pays to use a tax and accounting professional to help you strategize, plan and make financial decisions throughout the year. Doing so ensures that you will have more time when you’re not up against a deadline or anxious for your refund.

This column is for information only and is not intended as advice. Each household’s financial circumstances are different, so it’s important to fully consider your specific situation and goals before making any major financial decisions.

Norm Grill, CPA, (N.Grill@GRILL1.com) is managing partner of Grill & Partners, LLC (www.GRILL1.com), certified public accountants and consultants to closely held companies and high-net-worth individuals, with offices in Fairfield and Darien, 254-3880.