Tax season can feel like a stressful sprint to the finish line. But it doesn’t have to be! With some planning and preparation, you can make tax time feel more manageable. This blog will walk you through simple steps to stay on top of taxes all year long.
Winter/Spring: Gather Documents and File Early
As soon as your W-2s, 1099s, and other tax forms start arriving in the mail or online, gather them in one place. Review the forms to estimate if you’ll get a refund or owe additional taxes.
Once you have all your paperwork, file your tax return as early as possible. Filing early means getting your refund faster if you’re owed one. Just try to file by April 15, the tax deadline (unless it falls on a weekend or holiday). April 15 is also the last chance to make prior-year contributions to IRAs or retirement accounts.
Summer: Strategize To Reduce Next Year’s Taxes
Summer is prime time to make big money moves aimed at lowering your tax bill next year. Consider things like:
- Postponing income until January 1 if your tax rate will stay the same
- Bunching deductible medical expenses into one year to meet the deduction threshold
- Selling losing investments to offset capital gains you already realized
Planning ahead can really pay off at tax time! The less you pay in taxes, the more you can save and invest!
Fall: Estimate Taxes and Make End-of-Year Moves
As the leaves begin to fall, it's time to look ahead to your upcoming tax bill. Review your paystubs and account statements to estimate your total taxable income and payments made so far during the year.
Make any necessary adjustments to your withholding to avoid underpayment penalties. Additionally, you can reduce your tax bill with end-of-year strategies such as:
- Delaying income until January.
- Maximizing deductible expenses.
- Adjusting your contributions to retirement accounts.
- Realizing investment losses to offset gains.
Proactive planning can make a significant difference in your tax situation.
Stay Tax-Smart All Year Long
The bottom line? Staying strategic about taxes year-round requires effort but delivers big rewards.
At City & County Credit Union, our aim is to simplify tax time for our members. We encourage you to reach out and connect with our experts who are always here to help guide you on the path to financial success.
