You officially have five weeks to file your 2018 taxes. Are you dreading or anticipating April 15th?
Most of us fall into one of these two buckets. It is a stressful season because you must gather so much information and you be accurate in the numbers you report. Sometimes getting a professional to do the work makes it easier. And sometimes you just have to buckle down and do it yourself. I’ve got tips for both sides of the fence…
For those of you who are dreading the deadline, I imagine you are expecting to owe taxes and don't like the sound of that. It is understandable. No one wants to owe the government money.
You do have options though…
· Adjust for future years. The best way to avoid owing taxes on April 15th each year is to either reduce your exemptions at work and/or pay quarterly estimated taxes. Keep this in mind as you prepare this year's taxes. If you owe $1800 for 2018, change your exemptions so that an additional $150 comes out of your monthly paycheck, so you at least break-even next year.
· Make installment payments. If you owe taxes for 2018 and you can’t come up with the money within the next 30 days, the government does take installments. You could apply for an installment agreement and pay over time. There will be a $120 fee and interest over time, but it is better than trying to hide from the IRS and not filing on time. Face the facts and create a plan that fits into your budget.
· Buy some time. Let's say you have some of the money to give the government that you owe, but you don't have all of it. Could you come up with the balance by May 15th? If so, file your taxes by April 15th and send in the amount you have right now. You will probably get a notice in the mail within 30 days saying you owe a balance. Then send in the remaining amount without penalties and interest.
If you are anticipating a refund, then you are probably excited about filing your taxes. Be careful as you decide what to do with those funds. Use this as an opportunity to improve your financial situation and don’t blow it all in one place.
Here are a few tips:
· Put some money in savings. Unexpected things happen, and you want to be prepared with at least $1000 in savings if you are trying to get out of debt. You may have expenses coming up like a car repair, summer camps, or non-monthly bills coming up that you could save for as well. Think forward, so you have a plan AND some money.
· Pay down debt. You had to know I want going to encourage you to use some of your windfalls for debt reduction, right?! This is the perfect time to get rid of some smaller debts or finish off the one you've been working on. Think about how good it will feel for that payment to be gone!
· Have a little fun. Yes, I said it! Enjoy some of your money. Go out to dinner, buy a new outfit, or go on a little staycation at a local hotel. No matter where you are on your financial journey remember that it is ok and encouraged to have a little fun along the way. If you don't get a chance to relax you could easily give up altogether.
Whether you are dreading or anticipating April 15th, it is coming ready or not! Use this time to put yourself in the best spot financially, and you won't regret later.
I don't do taxes… Thank God! However, I can help you figure out a strategy for handling your taxes and help you decide what works best for your budget. Feel free to schedule a Debt-Free Strategy session with me by clicking here.