We are just past mid-year and moving into the last quarter of the year. I always tell my clients that now is the time to begin assessing their tax situation so they’re not scrambling at the last minute to ensure they get the maximum refund on their return.
Here are a few easy “to do’s” that VaroTeam recommends you do to ensure a smooth year-end and tax filing.
File Your Taxes!….before we get into the tips, we need to emphasize the importance of recognizing filing deadlines. Ensure you have what you need to file by the deadline to avoid further penalties and interest.
Inventory your life….now is the time to do an assessment of where you are in life, and whether any changes in your personal circumstances will affect your taxes. Life events such as getting married or divorced, having a baby, purchasing a home, starting a business, etc…will affect the amount of tax you should be withholding on your paycheck. Now is the time to change or modify your W4 so you don’t pay in more than you should. We always tell clients, getting a refund is like giving the government an interest-free loan, and owing money makes you feel bad. The goal is to be at zero (no money owed, no money refunded) at the end of the year because that means you paid in exactly what you owed.
Being your own boss….nothing is more satisfying than owning your own business and doing something you really care about. Remember that as a self-employed individual you need to be highly organized with your finances. You may be liable to pay estimated tax payments or risk owing a pretty penny at the end of the year. If you aren’t sure, consult a tax professional for further guidance.
I dream of the day – retirement.…make sure you are maxing out your 401K contributions on an annual basis or at least maxing out up to what your employer contributes. Not only is matching “free money”, but you will also benefit from compounding as the markets move upward. Don’t miss out!
Get rid of it!….when was the last time you cleaned out your closet? This is the perfect time to get it done so you can make a donation to a local charity or nonprofit. Not only does it feel good to be organized, but you can and should save your donation receipt which can be used as a tax deduction at year-end.
With these recommendations, you will be in good shape at the end of the year. Remember, the most important thing is to not procrastinate on things that will benefit your bottom line.