Planning for tax time is a year round endeavor if you want to maximize your dollars and save on your bottom line… but who wouldn’t want to pay the least amount of TAX possible? The fact is although it’s time consuming it’s not that difficult to keep good records either by hand or computerized. Step 1. Keep good records
A good rule of thumb is to generate a refund or a balance due of no more than $500 ( I like to go with $200 but that’s just me). This means do not count on this money for emergencies or rent January – April. – Stick with me and we’ll work on the budget as a whole. You are literally only looking to pay for your tax liabilities and nothing more. refunds are generally your own money (unless your receiving EIC or the like) so why don’t you keep it as you earn it and save your own money. Why? because your not disciplined but well get to that.
By November of whatever year it is you should be able to look at the year-to-date amounts on your paycheck stubs and calculate, based on the prior years’ tax, if your going to have withheld enough tax or at least on track or not. This will at least help you identify any errors or miscalculations. Occasionally you may have to double check your W4(s) to ensure the correct withholding exemptions are selected and that you understand your tax responsibilities as soon as possible. “Exemptions” as per the W4 don’t always correspond to dependents.
*A Taxpayers situation can change or vary year to year, and does so quite often. Ex: More or Less income, Dependent or no Dependent, Itemized or Standard, and many more determining factors. Stay in tune!
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