One of the most frequently asked questions posed to us each year is "What are the changes in the tax law and how will they affect me this year?" The 2004 tax picture is much like 2003. Most items that were deductible in 2003 are still deductible. In some cases, specific deductions that were scheduled to sunset (expire) have been extended through 2004 and into future years. Also, some deductions, such as IRA contributions and the Child Tax Credit, were expanded, thus allowing more taxpayers to take advantage of them. These changes will benefit many taxpayers. They were the result of the Working Families Tax Relief Act of 2004.
The key to preparing your taxes is summed up in one word: organization. The more organized you are, the more homework you do, the more precise and accurate your tax return will be. Just as important, the results will be better. The second week in January is the perfect time to determine how many W-2s and 1099s you expect to be sent to you. Since 2004 has come to an end, you can also total all of your expenses by category, not by date, to be ready to begin the preparation of your taxes.
It doesn't matter whether you seek the help of a professional tax consultant or you take the job on yourself. It's not too early to get your ducks in a row. Organization is the key. It has been proven in my office many times over the years that the more prepared a client is, the better the job we can do in seeking out the little details—deductions and credits—that make a real difference in how much your refund will be or in how much you owe the government.
It is also not too early to book an appointment with a tax consultant if you plan to go that route. Some people wait until they have amassed all of their income statements (W-2s, 1099s) and then make the call to the TC. Often, by then it is too late. A better way is to call now and reserve a time that is convenient to your schedule and his. By waiting, you run the risk of the TC's schedule being full and his next appointment opening being sometime in July.
In the coming weeks, we will discuss all of the deductions to which you, as a person in the entertainment industry, are entitled. We will also cover the various adjustments and credits available to help you save real dollars from your tax bill. Finally, we will inform you of the various types of income and how they are treated, as well as many helpful hints to make your tax journey less stressful.