Whatever your business, the tax law is likely to offer a broad range of deductions and other opportunities to save on next year's tax bill. But to take advantage of these rules, you need a well-thought-out, organized approach that will enable you to take charge of your financial life and ensure that you aren't hit with a big bill from the IRS come April. The following tips can help you plan wisely for the rest of the year.

Keep and assemble your records. Whether you are an employee or working for yourself, you are, in effect, running your own small business. The IRS requires you to keep accurate records of any expenses connected with your business and, in general, to be able to account for your business activities. The IRS will be very generous to taxpayers who have receipts and can account for each check or charge as to its purpose and connection with your business.


Meet with a tax professional. While you may meet with your tax return preparer every spring to help with the filing of your returns, it's wise to have a continuing relationship with a tax expert with whom you periodically consult or just call on the phone. Everyone's tax situation is constantly evolving and speaking with someone knowledgeable about the tax law before entering into a transaction or making a change in your life could yield valuable planning advice that might save thousands of dollars.

Invest in yourself and your business. If you are self-employed (and to a lesser extent if you are an employee) you may be able to deduct — subject to limits — the cost of equipment — e.g., computers, cell phones, furniture — that you acquire in connection with the conduct of your business or employment. However, be sure you need what you buy because, while being able to write the purchase off as a tax deduction, you only save in taxes the marginal tax rate applied to your income, not the entire cost of the item.

In addition, deductions are also possible for charitable contributions made before year-end, and in certain cases, a credit may be claimed for tuition to take college courses.

Net gains/losses. If you buy and sell stocks, now is the time to evaluate your gains and losses. Investors often consider selling assets that have losses to offset any capital gains recognized earlier in the year. This "harvesting" of losses can offset capital gains and up to $3,000 of ordinary income with any excess can be carried over to reduce income in subsequent year.

Uncertainty remains. Despite being the best record keeper, consulting with a tax professional and wisely purchasing products or spending amounts that will hold tax deductions, uncertainties will remain regarding your tax bill. For the past decade (and this year is no exception), certain expiring tax provisions, such as a special deduction for the cost of school supplies purchased by teachers, must be retroactively reenacted. While Congress is likely to pass "extender" legislation, there is no guarantee, and therefore the best course of action is to assume the worst and be sure to set aside enough money to pay your tax bill if these deductions are not renewed.

Although these suggestions are unlikely to eliminate what you owe for 2014 entirely, they will enable you to better understand your tax liability and offer thoughts on how you might go about organizing your life and planning to reduce your taxes in the future.

Williamson is executive director of the Kogod Tax Center at the Kogod School of Business at American University.