Getting Your Documents Together at the End of the Year

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Getting Your Documents Together at the End of the Year

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End of year preparations are in full swing at Judith Heft & Associates, and today I’d like to share some of the best practices we have developed over the past 18 years.

We start with three folders for each client:

  1. Anything that’s going to be on a client’s income tax return like donations to charitable organizations, household payroll information, property taxes and medical expenses.

  1. Important tax documents, such as W-2’s, 1099’s and K-1’s.

  1. Personal and household expenses that are not deductible.

Organizing like this ahead of time means that when our clients’ tax organizer comes from their accountants, all of the pertinent information can be accessed quickly.

Tying Up Loose Ends And Putting It All Together

One of the things we do at the end of the year is “cleaning up” – like double-checking the documentation needed to claim charitable contributions. Taxpayers are required to obtain a letter from their charities documenting any donation of $250 or more. These letters have to be collected prior to filing. It pays to be proactive in asking your charities to provide you with your letter of thanks – many charities are staffed by overworked volunteers and take some time to mail out those letters.

Health Savings Accounts (HSA) and Flexible Spending Accounts (FSA) are becoming an increasingly popular component of people’s health benefits due to the changing landscape of healthcare coverage. The HSA and the FSA allow people to purchase medical expenses with pre-tax dollars by making a payroll deduction and placing it in a dedicated account. If the balance in an FSA is not used by the end of the year, a holder of an FSA must forfeit the tax incentive and claim the remaining funds as income. The good news is that virtually everything that is medically-related in a drug store can be bought with an FSA or HSA account.


The amount that is annually exempt from federal gift taxes has increased from $13,000 to $14,000 for the tax years 2013 and 2014. This exemption is based on inflation – it is the person who gives the gift that is responsible for paying any gift tax that may be due, and reporting the gift to the IRS on his or her tax return.

The Big Picture

Preparing reports ahead of time by using your accounting software will give you an idea of your overall financial situation, in addition to putting you ahead of the game in 2014. For example, some of our clients pay estimated quarterly taxes. My colleagues in the accounting field and I strongly recommend utilizing your software’s reporting functions to estimate your last quarterly state tax payment before the new year – that way the payment will be eligible as a deduction for 2013. Some of the reports you should run include:

  • Income and Expenses
  • Expenses by Category

That the joyous holiday season is punctuated by the dreaded tax season is an unfortunate fact of life. The good news is that there are professionals who are able to do for you what you cannot, or choose not to, do for yourself.

Wishing you a Happy New Year and a smooth, predictable tax season in 2014!

– Your friends at Judith Heft & Associates.  

Judith Heft

Judith Heft, Principal, Judith Heft & Associates is a personal financial concierge with offices in Greenwich and Stamford. She can be contacted via email at or by phone 203-978-1858.

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