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Three Financial Housekeeping Tips for the Post Tax Season


You did it! Whether you’re patiently awaiting a refund or unenthusiastically writing a check, you can officially put tax season behind you. While tax time can be stress inducing for even the most seasoned accountants, not to mention taxpayers, it’s never too early to start preparing for next year. We always advise our clients to use this downtime as an opportunity to reflect on the past financial year and perform a little financial housekeeping.

1. Perform a year-end financial analysis

Having just reviewed your major financial documents for the year, you have a pretty good idea of your financial wins and losses. Taking a closer look with an open eye and willingness to learn can go a long way – in other words, use this last year’s financial experience to improve the future.

Analyzing your expenses can help identify ways to save more money. For example, consider raising your 401k contributions if you notice that your income rose last year and you are not maxing out currently. Or, if you aren’t there yet, committing to packing your lunch, or making your own coffee can add up throughout the year.

2. Consult with your accountant or financial advisor

Finances are complicated. After you’ve done your base analysis, consult with a professional for a deeper understanding. They can bring a fresh set of eyes to your financial situation and offer helpful solutions.

Maybe your goal is to buy a house this year. An accountant can help you prepare financially, compare different loan options, and explain how this will affect your taxes next year.

3. Implement new tools and strategies to track your finances

The best way to avoid a headache next April is to find ways to track and organize your finances throughout the year. Whether you file under a business or individually, there are simple things you can do.

For example, keep and organize your receipts. If you donate old clothes to Goodwill, be sure to take pictures of all items donated, and file your receipt now so you aren’t scrambling at tax time. Also, don’t be afraid to use technology to help you. Create an Excel spreadsheet to track your monthly expenses, or take advantage of mobile banking.

Final Note: With the recent changes to the tax law, it’s more important than ever to start planning now. If you have any questions about organizing your finances, we’re always happy to help – Just send us an email and we’ll talk.

When an Elderly Parent Might Qualify as Your Dependent

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

It’s not uncommon for adult children to help support their aging parents. If you’re in this position, you might qualify for an adult-dependent exemption to deduct up to $4,050 for each person claimed on your 2017 return.

Basic qualifications

For you to qualify for the adult-dependent exemption, in most cases your parent must have less gross income for the tax year than the exemption amount. (Exceptions may apply if your parent is permanently and totally disabled.) Social Security is generally excluded, but payments from dividends, interest and retirement plans are included.

In addition, you must have contributed more than 50% of your parent’s financial support. If you shared caregiving duties with one or more siblings and your combined support exceeded 50%, the exemption can be claimed even though no one individually provided more than 50%. However, only one of you can claim the exemption in this situation.

Important factors

Although Social Security payments can usually be excluded from the adult dependent’s income, they can still affect your ability to qualify. Why? If your parent is using Social Security money to pay for medicine or other expenses, you may find that you aren’t meeting the 50% test.

Also, if your parent lives with you, the amount of support you claim under the 50% test can include the fair market rental value of part of your residence. If the parent lives elsewhere — in his or her own residence or in an assisted-living facility or nursing home — any amount of financial support you contribute to that housing expense counts toward the 50% test.

Easing the burden

An adult-dependent exemption is just one tax break that you may be able to employ on your 2017 tax return to ease the burden of caring for an elderly parent. Contact us for more information on qualifying for this break or others.

Help Prevent Tax Identity Theft By Filing Early


identify theft

If you’re like many Americans, you might not start thinking about filing your tax return until close to this year’s April 17 deadline. You might even want to file for an extension so you don’t have to send your return to the IRS until October 15.

But there’s another date you should keep in mind: the day the IRS begins accepting 2017 returns (usually in late January). Filing as close to this date as possible could protect you from tax identity theft.

Why it helps

In an increasingly common scam, thieves use victims’ personal information to file fraudulent tax returns electronically and claim bogus refunds. This is usually done early in the tax filing season. When the real taxpayers file, they’re notified that they’re attempting to file duplicate returns.

A victim typically discovers the fraud after he or she files a tax return and is informed by the IRS that the return has been rejected because one with the same Social Security number has already been filed for the same tax year. The IRS then must determine who the legitimate taxpayer is.

Tax identity theft can cause major complications to straighten out and significantly delay legitimate refunds. But if you file first, it will be the tax return filed by a potential thief that will be rejected — not yours.

What to look for

Of course, in order to file your tax return, you’ll need to have your W-2s and 1099s. So another key date to be aware of is January 31 — the deadline for employers to issue 2017 W-2s to employees and, generally, for businesses to issue 1099s to recipients of any 2017 interest, dividend or reportable miscellaneous income payments. So be sure to keep an eye on your mailbox or your employer’s internal website.

Additional bonus

An additional bonus: If you’ll be getting a refund, filing early will generally enable you to receive and enjoy that money sooner. (Bear in mind, however, that a law requires the IRS to hold until mid-February refunds on returns claiming the earned income tax credit or additional child tax credit.) Let us know if you have questions about tax identity theft or would like help filing your 2017 return early.


Any U.S. tax advice contained in the body of this website is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.