Resolve to plan now, save laterWEST LAFAYETTE, Ind. -- Jan. 1 is the perfect time to begin to plan for next year's taxes, says a Purdue University accounting professor.
"It's too late to do anything about the 1997 return, so you might as well start planning ahead." says John "Jack" Hatcher, assistant professor of management in the Krannert Graduate School of Management. "January is a great time to project what you think your 1998 taxes will look like. Once you get that picture, you can start making changes. Start a new Roth retirement account, increase charitable giving or take advantage of some of the new educational tax credits. Increase your pretax contributions to your 401(k) or retirement plan. It's so much easier if you make those decisions early in the year, rather than trying to fit it all in before you file."
Hatcher teaches tax courses in the accounting program at Krannert and offers the following tax tips for early bird planners:
Good records are especially important for taxpayers who have a home office or have outside income and are filing a Schedule C. That is the IRS form for reporting profit or loss from an unincorporated business of which you are the sole owner.
"The Internal Revenue Service tends to look very closely as those filers," Hatcher says.
He says all tax returns are put through a computer audit to check the math and to make sure that what taxpayers are claiming matches up with what banks, mortgage companies and charities are reporting.
"Only 1 to 2 percent of all tax filings get a full-blown audit from the IRS," he says, "but it never hurts to be prepared."
CONTACT: Hatcher, (765) 494-4478; e-mail, firstname.lastname@example.org
Purdue News Service: (765) 494-2096; e-mail, email@example.com