Tax resolutions for the new year
ARA
It might be coincidental that the new year and the beginning of tax season arrive so close together. Many people resolve to be wiser with their money in the new year, and it just so happens that being smart about your taxes is a good way to get started.
Whether it's your only resolution or just one of a few, sticking to your new year's tax resolutions throughout the whole year is the trick to being successful. And just like taking losing weight during the year will have you in better shape for the future, following your financial resolutions can make tax time far easier next year.
Use these tips to help build a successful approach to your tax resolution.
- Get started now. Procrastination can be your downfall - it often happens that the longer you put something off, the more daunting a task it seems. And the last thing anyone needs is an excuse to be more overwhelmed by the thought of working on taxes. If you know that you struggle with preparing your return, make the call to a professional who can help you. But again, don't wait - tax preparers' appointment books fill up fast during tax season.
- Set up a filing system - and stick to it. The flurry of paperwork is stressful enough when you're doing your taxes - not being able to find a necessary slip of paper only makes it worse. Create files for receipts and other documents and be sure to keep them updated. If you want to go digital, use a scanner to file everything neatly away in specialized folders on your computer.
- Take advantage of tax-saving benefits offered by your employer. If they're available to you, consider how much smarter it is to use pre-tax dollars for things like medical expenses and child care. If you need more guidance about how to best take advantage of the offered programs, check with your human resources department, or your own tax preparer or financial planner.
- Promise to give yourself a tax check-up twice a year. Don't let yourself be shocked when tax time rolls around - the psychological and financial stress of being unprepared for a big tax bill can take a major toll. Do yourself a favor by checking on your tax liability a couple of times through the year. If you need to make adjustments to your withholding, do so as quickly as you can. Even if you find that nothing needs to be changed, you'll have something to smile about and one less worry to occupy your mind.
- Make it a habit to save. Putting extra money away is always a good habit, whether the intent for it is to help pay off tax bills or to purchase a new vehicle. Giving yourself a little extra cushion to fall back on doesn't have to make you feel fiscally stressed, though. Put away $20 here and there, or have a percentage of your paycheck sent directly to a savings account, and you'll be excited by how much you have at the turning of the next new year.
Bothersome as taxes can seem, if you prepare for them throughout the year, you might find the experience far easier the next time you have to file. For more ideas about a financially sound new year, visit blog.equifax.com.
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