Benjamin Franklin once said, “In this world, nothing is certain except death and taxes.” While much has changed since Ben Franklin’s time (and thank goodness, can you imagine life with no air conditioning or microwave ovens?), one thing has stuck around—taxes. Paying taxes can be stressful, but with a little bit of planning ahead, tax time can go from downright scary to just a minor inconvenience. Here are a few things to keep in mind throughout the year as you prepare for next year’s tax season:
- Make sure your employer(s) have your current contact information. Once the forms start flying after January 31st, you’ll want to make sure you have access to your W-2s and any other fun forms you might need when you file your taxes. It’s simple, but save yourself the headache and make sure things are being sent to the right mailing address or email.
- Keep good records. While being audited by the IRS is unlikely, you never know. It’s a good idea to make sure you have access to all your paystubs for the year in either physical or electronic form. Other pertinent documentation is good to have on hand too– Just in case.
- Own a business? Keep track of your income AND your expenses. Keeping receipts in a designated location is a good rule of thumb, even if it’s just an envelope in a drawer. Additionally, consider using a spreadsheet or software in order to track every penny that goes in or out. Do this throughout the year to save you the stress of sorting out your income and expenses right before the filing deadline.
- Look into what tax credits you may qualify for. There are many different tax credits out there that can benefit you at tax time. It might surprise you how many things you already pay for could give you a break on what taxes you’ll owe. Talk to a tax professional for detailed information.
- Check your withholdings. While the amount withheld from your paychecks is dependent on many factors, in general if you had more withheld throughout the year than you needed to, you get a tax refund; if you had less withheld than you needed to, you owe money to the IRS. If year after year you end up owing money at tax time, or if you end up with a big refund but you’d rather have that money in your pocket each time you get paid during the year, check out this handy dandy calculator or consult a tax professional to see if some adjustments might be right for you. All it typically takes to adjust your withholding is filling out one form!
And if you do end up with a hefty tax refund and aren’t sure what to do with it, or you owe the IRS a chunk of change and aren’t sure how you’ll work that into your budget, we can help. Schedule a financial counseling appointment with us and one of our counselors will help you come up with a plan that works for you, your budget, and your goals. Call 888-258-2227 or email CFR@LssSD.org.
Written by Dana Goeman, Financial Counselor and Educator
LSS Center for Financial Resources
Consumer Credit Counseling Service | Housing Resources | Sharpen Your Financial Focus | Financial Fitness Education
705 East 41st Street, Suite 100 | Sioux Falls SD 57105-6047
605-330-2700 or 888-258-2227
www.LssSD.org
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