As an experienced tax attorney, Gary R. Dettloff understands how taxes can weigh heavily on the shoulders of ordinary folks throughout the whole year. According to Gary R. Dettloff, the tension ratchets up even higher as the deadline draws near. Below, he outlines a number of ways that people can reduce their stress.
Interviewing Experts: Is it true that most people put off their taxes until the last minute?
Gary R. Dettloff: For many people, that is true, however, advance preparation can actually save people money by keeping their affairs in order throughout the year. I often share some tips with my clients to help them plan.
Interviewing Experts: Give us an example of such a tip.
Gary R. Dettloff: For example, if the individual makes a donation to a favorite charity by December 31, it can be claimed on a tax form immediately. Waiting too long might lose the benefit, or delay it for a time. But “how” to do it is also important.
Interviewing Experts: How should a taxpayer best use their assets if they want to give?
Gary R. Dettloff: Taxpayers should often use appreciated assets as a way to make contributions, which can help avoid capital gains taxes and increase the value of the gift while reducing the actual cost. It’s a win-win.
Interviewing Experts: When should people review their portfolios?
Gary R. Dettloff: Before the end of the year is generally the most appropriate time to perform a complete review of all investments.
Interviewing Experts: How should people approach this review?
Gary R. Dettloff: They should consult with their advisors and look for areas where they might improve their overall standing. If they decide to sell, they should keep an eye on the basis they have in each investments. Balancing “losers” and “gainers” can help keep taxes to a minimum. But don’t let “the tail wag the dog”.
Interviewing Experts: How do retirement accounts figure into the mix?
Gary R. Dettloff: If a taxpayer holds retirement accounts, it’s often an intelligent strategy to convert these funds into a Roth IRA, especially if rates are low.
Interviewing Experts: Why is the Roth IRA a smart option in a low tax year?
Gary R. Dettloff: The Roth IRA grows in value without accruing taxes. There is no deduction in the acquisition, but also no tax owed when it is withdrawn in retirement. Because it does offer a deduction, however, in a higher tax year a regular IRA is often a better choice. Taxpayers should plan ahead. Then act wisely.
Interviewing Experts: How else can taxpayers help their cause?
Gary R. Dettloff: Saving tax documentation should be routine throughout the year. Good records lead to lower taxes.
Interviewing Experts: What can be done if it’s too late for this year?
Gary R. Dettloff: It’s always good to start a good habit. Even if someone hasn’t organized all their documents, spending time at the end of the year to sort through old paperwork can help. Just set aside any items that might be valuable, and get in the habit of doing it routinely from now on.
Interviewing Experts: What about potential deductions?
Gary R. Dettloff: Taxpayers should gather all of their receipts together. I also recommend that they create a list of all items they expect to deduct for the tax year.
Interviewing Experts: Can technology be utilized to make the process easier?
Gary R. Dettloff: Yes, tablets and smartphones often make it easier for an individual to keep accurate financial records at the time transactions occur. Our firm stresses the importance of using technology wisely.
Interviewing Experts: What’s one last piece of advice?
Gary R. Dettloff: Tax time doesn’t necessarily have to be stressful, with the right help. By following a few worthwhile techniques, clients can be prepared for April.
As a tax attorney with Waterford Tax Group, Gary R. Dettloff leverages his three decades of experience in the industry for the benefit of families throughout Middle America.