Tax Strategies For This Year and Next

Almost every accounting firm has clients who are stragglers. Despite your best efforts to get someone ready for income tax season to end on April 15, some clients fall through the cracks and simply do not have the gumption for tax time.

Instead of admonishing your clients for being tardy, implore them to get ready with some simple tax strategies that could save money on income tax bills this year and next year. Accountants at your firm can show the value of their services by saving clients tax money and even put a refund in their pockets. Everyone wins in this scenario, as your clients love you for pointing out extra money to get back, while you have job security for another year.

Taxpayers with some extra income can contribute to an IRA before the filing deadline. The maximum contribution is $5,500, or $6,500 for someone 50 and older. The IRA contribution triggers a tax deduction depending on someone's adjusted gross income. Employees with an active employer retirement plan may not be able to take this deduction, but ordinary taxpayers stand to benefit from this itemized deduction.

Self-employed clients have a few income tax benefits to reap. Those with a lot of income can contribute to a Simplified Employee Pension, similar to an IRA, for even higher amounts than standard retirement accounts. Taxpayers can deduct the lower figure of up to $25,000 or 25 percent of compensation for this pension plan. Clients incur tax savings when their adjusted gross income is reduced.

Any self-employed client can take an income tax deduction for in-home office use. For those clients who keep records, the IRS takes into account direct expenses needed to run an in-home office. Otherwise, taxpayers can deduct $5 for every square foot of the home office, up to $1,500. A portion of the home must be used exclusively for business purposes.

Try to get your clients to apply part of their refund toward an estimated tax bill for the following year. Installment payments are due once per quarter, and the IRS can automatically put all or part of a refund towards a future tax bill if you check the right box on Form 1040.

Do not forget to tell clients how the Affordable Care Act may affect their income taxes in coming years. Clients who make more than $200,000 pay a surtax of 0.9 percent to help pay for the act's initiatives. Penalties for clients who do not have health insurance begin in 2015 and increase in subsequent years.

If these tax strategies still are not enough to get your clients in line, there is always Form 4868. This form gives individuals an additional six months to file an income tax return. Although this situation is not ideal, a valuable client's returns are better late than never.

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