Whew! You made it past April 15. Time to relax and ignore your taxes until next year, right? WRONG!
Tax planning is a year round endeavor, at least it should be. Here are just a few things you should be doing now to help you keep more money in your pocket, and less in the IRS coffers.
Get Organized!
While all your tax files are still handy, take the time to organize them. Create files for: Income, Medical, Donations, Real Estate, Child Care, Tax Correspondence, Student Loans, Miscellaneous Receipts, Tax Payments, and Archived Tax Documents. And keep the files handy. If it is easier to put receipts and documents in files as throwing them in a pile on the kitchen counter, you might actually still have that receipt next year. Another helpful tip: write down what the expenditure was for, the dates and who was involved, and attach it to the actual receipt. You probably won’t remember every single deductible expense a year from now, so make a note and ensure you get every deduction you’ve got coming to you.
Change Withholdings
Did you get a fat refund this year? Then you may want to adjust your withholdings. I know getting a big check from the government feels good, but wouldn’t that money be more useful to you all year long? With the average refund running around $2,500 that’s $200 a month you could keep in your pocket! Stop giving the government an interest free loan while you struggle to make ends meet. On the other hand, if you found yourself with a big tax bill, consider increasing the amount withheld from your paychecks. Remember that we’re aiming for the “Goldilocks” principal: not too much, not too little, but just right.
Get Educated!
Most people are missing out on deductions and credits they are entitled to, all because they don’t know any better. Americans are so terrified of taxes because they don’t actually know that much about them. Pick up a book, peruse the IRS website, or take a class. By taking some initiative, and learning more you are becoming a better steward of your family’s finances. If that’s not enough to convince you remember, increasing your tax knowledge can save you money!
I promise next tax season will be much easier if you do just these few simple things.