Experts: Mid-year tax planning may be even more important this year

Financial industry insiders have said the economic turmoil, the various stimulus measures as well as recent tax law changes make it more necessary than ever to review one’s finances at mid-year.

In particular, experts from the California Society of Enrolled Agents, an association of tax professionals, suggest those who take the time to analyze their fiscal situation may find unexpected savings and protect their assets.

"Whatever your personal tax situation, mid-year is traditionally a good time to [assess] what your options are for the rest of the tax year and beyond," says David A. Shaw, the organization’s president.

Among the key factors to consider at a periodic review are adjusted withholdings, a closer scrutiny of which may mean extra money in consumers’ wallets this year. That is because the Recovery and Reinvestment Act of 2009 includes provisions for Making Work Pay refundable credit that reduces withholdings for many workers.

In these volatile times, a review of one’s retirement plans is also a good idea, while keeping in mind that current life changes – such as marriage, divorce, birth or adoption – can also have far-reaching tax consequences.

Finally, the organization reminds taxpayers that eligible first-time homebuyers may qualify for a credit of up to $8,000, which may be claimed on either 2008 or 2009 returns. And families with college-bound kids may benefit from tax-deferred savings plans.