It's April 15 and probably you've finished your Form 1040. Does that mean you're done with taxes?
Maybe for 2009, but the next taxable year is already as much under way as the baseball season.
Personal-finance experts say this is a year to follow some perennial tips and also to plan for some significant tax changes on the horizon:
A Roth IRA opportunity. This year anyone can convert a traditional IRA (individual retirement arrangement) to a Roth IRA, regardless of their income. It's not the right move for everyone, but it's something to consider. A Roth account will shelter you from future taxes (when money is withdrawn in retirement) that may be higher than your tax rate today.
The catch: You'll owe taxes now as you do the conversion. It's something to weigh carefully, with help from an online calculator or possibly a financial adviser.
James Guarino of MFA, a New England accounting firm, notes that the Roth can also have estate- or gift-planning benefits. Among them: There's no tax liability that would be passed to heirs who inherit these accounts. The Roth also has no minimum distributions starting at age 70-1/2 (unlike traditional IRAs), and you make new contributions into the account after that age as well, Mr. Guarino writes in a recent newsletter.
Plan ahead for 2010 and beyond. This can be important whether or not you're directly affected by big changes on the horizon. But two shifts are worth noting. One is President Obama's new health care reform law. Most of the big provisions are still a couple of years away, but some elements are already in place.
Second, tax rates are rising for households with income of $250,000 or more. This is partly because of health reform. More broadly, President Obama wants to let the Bush tax cuts expire for those in the top income brackets. Starting in 2011, that could mean top income tax rates of 39.6 percent, and higher rates on capital gains as well.
As a result, some people may plan to shift taxable income into the 2010 calendar year, rather than 2011 or later. (That, coupled with Roth conversions, could mean a windfall of tax revenue for the federal government over the next 12 months, by the way.)
Whatever your income, people's circumstances are so varied that it may pay to consult an adviser or accountant about making some financial adjustments for tax reasons.
Keep your documents in order. While taxes are fresh in your mind, it's a good time to make sure you kept a copy of your returns and related documents. They may come in handy for future reference, especially in the event of an IRS audit.
Bottom line: It's wonderful to stop thinking about taxes. But it can also be useful to spend just a little extra time to make coming years less taxing.
Also in Tax Day 101:
Part 9: OK, now it's time to plan for next April 15