There’s almost nothing more certain in life than paying your taxes. Well, maybe one thing. You pay the tax man for all the income that you earn, excepting deductions or other legal tax exemptions. Tax time shouldn’t trigger a frenzy for you: preparing for your tax prep is an all-year activity that means building a budget, tracking your expenses and always paying your taxes to save your sanity and your nest egg. Remember, taxes will always be a part of your overall financial picture, so keeping them on your radar helps you avoid surprises now and in the future.
Budgeting gives you the power to test out how your spending is working for you. When you set up a budget, you forecast what that money is going to do for you. That way, when you get your paychecks, you already know what you’ll do with them. In a way, it’s a bit like looking into the future – as long as you can stick to your budget. Even if the initial budget you set needs some tweaking, knowing more about how you spend means you can realistically carve out funds to pay your taxes or trim down debt.
Tracking Deductible Expenses
The IRS lets you write off money that you spend for purposes that it approves. People mention deductions often, but once you know what they determine as being in versus out, it’s easier to keep track of them while you’re spending. Deductible expenses can include money that you spend on mortgage interest, your charitable donations, moving expenses if your job relocates you, or money that you spend on managing your investments. To claim your deductions, you’ll need to be able to prove that you spent the money, so hold onto those receipts as you spend.
Paying Your Taxes
Your tax return is normally due on April 15, or on the first weekday after April 15 if it falls on a weekend (April 18 this year). Not filing your return and not paying your taxes could land you in trouble with the IRS. If you don’t pay the IRS, it can record a federal tax lien against your property. It will show up when you check your credit report, and it could lead to you having bank funds seized or your wages garnished by the IRS. It’s part of your civic duty to pay your taxes each year, so plan to keep April 15 as a red-letter day on your calendars year after year.
Looking back over complicated finances and preparing your tax information can be overwhelming. If you own a small business, your information can be much more complex in addition to simply having a much larger balance sheet, and could affect your ability to take write-offs. The way that you choose to save now for retirement or other future goals can impact your taxes now as well as how you’ll choose to structure your golden years. If the self-help options aren’t able to give customized advice about your specific challenges, connecting to expert outside help can give you valuable information to make better decisions for your future.
As April draws near, don’t let your tax prep be a surprise. And if you always end up kicking yourself when it’s time to compile information for deductions, now’s the chance to keep a better file for next year. Think quickly about what setup would be helpful to you to make a quick scan as you pull receipts, and put those thoughts into action as 2016 continues on.
This article is provided for general guidance and information. It is not intended as, nor should it be construed to be, legal, financial or other professional advice. Please consult with your attorney or financial advisor to discuss any legal or financial issues involved with credit decisions.
Published by permission from ConsumerInfo.com, Inc., an Experian company. © 2015 ConsumerInfo.com, Inc. All rights reserved.