Were you surprised when you looked at your tax refund this year…or lack thereof? If you didn’t get back as much as you planned for, you may be able to prevent that from happening next year by making a few simple tweaks this year. You see, planning now can really help alleviate stress and surprise later. In knowing how to fix any issues, you’re able to get the most out of your tax experience. So, if you were surprised at your tax bill this year, it’s time to listen. Here are our top tips for planning for next year’s taxes right now.
Make Changes to Your W-4
If you were surprised at how much you owed this year or how little you got back in your return, it may be time to make some changes to your W-4. This is the form that you fill out for your employer, which tells them how much money in taxes to withhold from your paycheck. If your refund was much larger than you anticipated, you may want to consider reducing your withholding. However, if your refund was much smaller, or worse, you owed money, you may want to consider raising your withholding. Keep in mind that this is something that you can do at any point in the year, so don’t be afraid to ask to take a closer look at it at any time.
Start Saving for Retirement
Do you keep putting off opening up a retirement account? Well, there’s no time like the present to start saving for retirement and potentially lowering your tax bill. Contributing to an IRA can help you come tax time, and the longer you’ve been contributing, the better. It may be possible for you to deduct your contributions made to a traditional IRA; however, there are stipulations, so it’s best to consult the help of a tax professional for this. You may also consider starting a 401(k) with your employer. A 401(k) is an effective way to reduce your tax bill, since the less taxable income you incur, the less tax burden you bear.
Donate to Charity
Do you have a closet full of clothes that you’ve been meaning to go through and donate? Be sure to donate them and get an itemized receipt before December 31st, so that you can deduct them on your tax return. Charitable contributions are deductible and can really add up in value. Items that can be donated include:
The important thing to note here is that you must get a receipt from the facility that you donated to, in order to be able to deduct these items from your tax bill.
Planning for Success Next Tax Season
So, you may have gotten quite the surprise when you received your tax bill this year. Whether it was a good surprise or a less than desirable one, making some changes early on can help. You may not be thinking too much about next year’s taxes, but tax season will be here before you know it. Set yourself up for success with your taxes by making some adjustments now.
The tax experts at Bodine Perry are here to assist you with your financial needs! Call (855) 851-8318 or visit www.bodineperry.com to learn more.