February 2014 > Tax Return Tips

Retirement Corner

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Tips for 2013 Tax Returns

No matter what your income level it’s wise to start preparing early for the April 15 tax-filing deadline. Here are some things to keep in mind as you prepare your 2013 return.

  1. Contribute to a UTSaver retirement savings account reduce your taxable income.

    For many UT employees, contributing to one or both of the UTSaver retirement savings accounts provides the biggest potential for tax savings. Dollars contributed into a tax-deferred account such as the UTSaver 403(b) Tax Sheltered Annuity or the UTSaver 457(b) Deferred Compensation Plan lowers your income for taxable purposes, resulting in immediate savings and a lower tax bill each year.

    To learn more about any of the UTSaver plans, visit the UT Retirement Program webpage at www.utretirement.utsystem.edu.

  2. Take advantage of time-savers.

    Here are a few time-saving options that can make your life easier at tax filing time:

    • The new simplified option for home office deduction. Rather than filling out a 43-line form that requires you to enter a percentage of household expenses for utilities, mortgage interest, repairs, and other items, you can simply deduct $5 for each square foot of home office space you use as an office. The limit is 300 square feet, for a maximum deduction of $1,500, assuming all criteria are met.

    • Use the IRS Sales Tax Deduction Calculator, which provides an estimated sales tax number based on your location and income, plus big-ticket purchases such as cars or homes.

    • Use electronic filing. In addition to saving you a trip to the post office, e-filing could speed up your refund or let you know sooner if the IRS sees a problem with your return. If your adjusted gross income was under $57,000, you can use the IRS’s Free File service to file electronically at no cost using commercial tax preparation software. If your AGI was higher, you can still file for free on the IRS Web site using online “fillable” forms, but they’re much less user-friendly than commercial software.

  3. Use your 2013 tax return to start planning your 2014 tax strategy.

    The biggest mistake made by taxpayers year in and year out is procrastination. The longer you wait to plan and implement an effective tax strategy, the more difficult it is to have a significant impact on your tax liability. As you prepare for your 2013 tax returns, you will get a good idea of your tax picture for 2014. Maybe you can increase your UTSaver 403(b) or 457(b) contribution, manage your charitable giving more effectively with a donor-advised fund, or pursue a wide range of other strategies.

Taxes can be complex, and every taxpayer’s situation is different. These tips will help you get a good start on your 2013 tax return, but be sure to explore further, perhaps with the guidance of a tax professional, if you have specific concerns or circumstances.

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Article provided courtesy of Fidelity Investments: https://www.fidelity.com/viewpoints/personal-finance/tax-tips-2013-tax-returns. The tax information and estate planning information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice.