It’s never too early to get a start on next year’s taxes. The earlier you begin, the less painful the process is likely to be. Besides, by thinking ahead, you’ll be in the best possible position to cut your tax penalties. Fewer headaches and lower payments are great! Here are some tips to get you started:
1. Mark Your Calendar
Make sure you know your tax filing deadline. For 2023’s taxes, it is April 15, 2024. If you’re self-employed, your quarterly payments are due as follows:
April 15, 2023
June 15, 2023
September 15, 2023
January 15, 2024
Knowing these deadlines can keep you on track so you’re not surprised when tax season arrives.
2. Find Last Year’s Tax Return
Last year’s tax return might offer a glimpse into your future. Unless something big changes, you’ll likely have the same liabilities and credits as last year. Of course, if you were unhappy with your taxes last year, you can consider ways to lower them through donations or deductible expenses.
3. Make Retirement Contributions Throughout the Year
Adding to your retirement account throughout the year can help you reach your long-term financial goals. If you wait too close to April 15, though, you run the risk of not having enough funds to make a meaningful contribution. Contributing throughout the year keeps you on track for retirement as well as tax season.
4. Create a Tracking System
Saving your receipts for your annual deductions can be laborious. Create a system that lets you track expenses and save receipts so you’re prepared for next year. Digital apps can help you track spending, but you’ll also need to keep your info in a safe place so you’re prepared for next April.
5. Plan Your Giving
If you intend to make charitable donations this year, doing so is a good way to give back to the community. Your donations are also tax-deductible. You might start to plan your donations now to ensure you meet your commitments and stay within your personal budget.
6. Consider Major Life Events
Is anything changing in your life soon? Marriage, children, and moving are all events that can impact your taxes and deductions. That doesn’t mean you need to plan your life around your taxes, but do think ahead. Prepare yourself for how these changes will impact your tax filing come next April.
7. Consult a Professional
When in doubt about your tax situation, you can always consult an accountant. They can provide guidance on future deductions and credits and advice on how to maximize your refund. The best time to consult them is now so that you put yourself on a good trajectory for the rest of the year.
Everyone knows just how important it is to “be prepared.” Planning ahead for next year’s taxes will make things easier, and it may even help you keep more of your hard-earned money in the years to come.
This article is for information, illustrative and entertainment purposes only and does not purport to show actual results. It is not, and should not be regarded as investment advice or as a recommendation regarding any particular investment action.