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Hey Taylor
- I filed my taxes last month and like every year, I didn't do enough
prep work and I think I paid more than I probably should have. I want
to do better next year so I'm asking way in advance - what are some
things I should be on the lookout for? - Blair
Hey Blair - You're doing the right thing in looking ahead to
next year. Taking care of taxes at the last minute never works as
well as preparing ahead of time.
With a good strategy, you can lower what you'll pay when you file
while also reducing the taxes taken from each paycheck. If you make
a focused effort now, you'll definitely see the benefits at the beginning
of 2019. |
1.
Increase your retirement investment. Whether you have a 401(k)
or an IRA, putting more money into that account can help with your
tax situation. Without earning less, you'll reduce your taxable
income and save money over the course of the year. You'll also put
more into your retirement account, which is always a fun thing to
do.
2. Donate things you don't need. Lots of the stuff in your
basement or attic won't sell at a garage sale. However, those same
items can be given to charitable organizations and secondhand stores
in exchange for a receipt that you can use when it comes time to
file your taxes. If you own a business and have desks or computers
you no longer need, you might be able to make a sizeable donation.
People often overlook this option, thinking the work isn't worth
the reward; if you find enough stuff to give away, it's not too
hard to save yourself a few hundred dollars when the IRS comes to
collect.
3. Adjust your W-4. If you're content with your paycheck
all year round and then end up owing too much when it comes time
to file, a simple adjustment might make all the difference. Having
your employer withhold more during the course of the year means
you get more back when you complete your tax return. Meanwhile,
if you get a big return each April but have trouble covering your
bills during the other 11 months, you might want to reduce the withholding
and keep a little more of those wages. This is the simplest option
for changing your tax situation, and yet it's one of the most commonly
overlooked.
In addition to
these points, make sure you diligently track the rest of your spending
throughout the year. Keep a mileage log, research the business write-offs
frequently used by people in your field, keep record of your expenses,
and make sure you keep receipts for all the big purchases you make
throughout the year. The more detailed your recording, the more money
you can keep in your pocket. Good luck, Blair!
© Taylor Kovar
May 11, 2018
More "Go Far With Kovar"
Disclosure: Information presented is for educational
purposes only and is not an offer or solicitation for the sale or
purchase of any specific securities, investments, or investment strategies.
Investments involve risk and, unless otherwise stated, are not guaranteed.
Be sure to first consult with a qualified financial adviser and/or
tax professional before implementing any strategy discussed herein.
Past performance is not indicative of future performance. To submit
a question to be answered in this column, please send it via email
to Question@TaylorKovar.com,
or via regular mail to Lessons on Wealth, 106 E Lufkin Ave., Lufkin,
TX 75901. |
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