I have a sign in my office that reads: "The best preparation for the future is the present well-tended." Henry Ford. This statement seems to ring even truer when it comes to planning for our financial futures. We are approaching the tax deadline of April 15th, which means it's a good time to share a few good practices when it comes to filing taxes, planning for next year, and managing refunds.
1. Even though we're already a few months into 2014, it's not too late to plan for next year's tax season. There are several opportunities you can take advantage of that can save you money but beginning early is the key. Need an example? In Indiana, you can set aside money for your child's 529 Plan and get 20% back on your taxes. That kills 2 birds with one stone!! Planning for your child’s future and reducing your tax burden today. Even starting in April, you have a great opportunity for next year! If you don’t live in IN look for your state specific 529 plan and see what tax opportunities you might have.
2. Are you getting a large refund this year AND operating on a tight budget? Adjust your withholdings so that you have more money during your month to work with rather than waiting for it as a lump sum at tax time. Check out irs.gov and search for the withholding calculator. It will tell you what to change your exemptions to so you can break even.
3. Speaking of refunds... If you're getting a refund, be clear about what you're going to do with that money BEFORE spending it. Planning ahead can ensure that you make the most out of the extra dough. Creating a “tax refund budget” will keep you focused on your goals as well.
For more information on how to manage your refund, be sure to join us for our next post!