It’s coming up to that time of year again – where we are all inundated with paperwork and calculating the taxes we owe. While a dread of the taxes owed haunts some, others cannot wait to spend their tax return.
Viewing the return as a windfall, we can tend to forget that better tax planning might have kept more money in our pockets all year long. Money that is taken from our budget and is not earning an interest is not wise financial planning.
Below are some tips of the trade to consider, as pertains to the amount of taxes that should be deducted from our income. These tools along with counsel from an advisor can help us to be better stewards of our income and also prevent an unwise spending spree come tax refund time.
Tip #1: Employee benefits.
Employee benefits can make a significant difference in our tax burden. Check with your HR department and see how you can optimize your contributions to a 401K and reap the benefits when you file your tax return. Comprehensive financial planning takes into account retirement plans
Tool #2: Withholding calculator
Use the withholding calculator provided by IRS to determine the best strategic amount to withhold to optimize your deductions: https://www.irs.gov/individuals/irs-withholding-calculator.
Tool #3: Professional Tax and Financial Planning
More than just filing taxes, tax and financial planners help their clients to best plan their income so their income is maximized.
Somewhere in the overwhelming record keeping of tax
Instead of planning for a nest egg once a year from a tax return, better tax planning will increase your daily budget and save money.