Half Way to Tax Time — How You Should be Preparing
Can you believe it’s already October? With Halloween looming, there’s also another holiday of sorts that approaching at a rapid clip: it’s nearly halfway to tax day 2018. Between this milestone and the fact that the end of the year already in sight, here are a few ways you should be preparing for next year’s taxes today.
Organize your documentation
While cleaning up and organizing are activities typically associated with spring, that won’t help you much when it comes to taxes. Instead consider some “autumn cleaning” for your finances and start going through your relevant tax documents and receipts now. Better yet, let this be a reminder to stay organized through April and beyond. This will not only make it easier to get the maximum refund possible come tax time but will also save you a lot of hassle should you be one of the unlucky few to get audited down the road.
Double check your withholdings
If you’re like most workers, you probably filled out your W-4 long ago and have forgotten about it since. Unfortunately, in some cases, this can mean your currently not withholding enough in taxes or perhaps even withholding too much. This can happen as the result of a recent marriage or perhaps your child is no longer young enough to be claimed as a dependent. No matter what the case, it’s always a good idea to review your withholdings and make adjustments if necessary.
Look for deduction opportunities
Are you growing concerned about your tax bill? Luckily you still have plenty of time to seek out deductions and ensure you qualify. Maybe it’s time you made a donation to a worthy charity or took advantage of some other tax deduction opportunities before the year’s end. Speaking of deductions…
Contribute to your IRA
Yes, it’s true that you have until April to contribute your retirement account and have it count toward your 2017 taxes, but why wait? Now is actually to perfect time to sock some money away before it gets claimed by holiday spending. Furthermore moving your money now will put it to work immediately, hopefully turning you a profit in the process. Just keep in mind that the limit for IRA contributions this year is $5,500 for those under 50 and $6,500 for those over 50. If you haven’t reached that limit, you should definitely consider making a contribution.
April may still be a ways off but that doesn’t mean you shouldn’t already be thinking about your taxes. Whether that means simply getting your documentation organized, checking up on your withholdings, actively seeking deduction options, or making some contributions to your IRA, there’s plenty to consider at this halfway point. In fact, by getting a jump on your tax planning this Halloween, you may help avoid a scary tax time experience next spring.
Also published on Medium.