Whew! Your taxes are done and it’s time to put up your feet and finally relax, right? You’re not too far off- the pressure is definitely gone, but before you just sit back until next tax season, there are a few things you can do to help make filing taxes easier next season. With a few adjustments you may be able to keep more money in your pocket and possibly increase your tax refund for next year.
Contribute More to Your 401(k)
Did you know you can do yourself a (double) favor by contributing more to your company’s 401(k)? How? When you opt in and have a portion of your income set aside for the account, it’s done pre-tax. That means you’re lowering your taxable income for the year while putting money aside for your retirement. It’s a win-win.
If you haven’t contributed enough to get a full match from your employer, see if you can at least increase to that amount. That’s extra money that’s free and can go a long way towards your retirement with the power of compound interest.
Take Advantage of Flexible Spending Plans and Health Savings Plans
If your employer offers a Flexible Spending Plan or a Health Savings Plan and you’ve signed up for it, make sure you’re taking full advantage of it. They are considered tax favored plans because your contributions are pre-taxed- this allows you to get reimbursed for medical expenses while lowering your taxable income. Keep good records and all your receipts. Check to make sure you’re not wasting any of your contributions by making sure you have qualifying medical expenses.
While most jobs having open enrollment in the fall, you can still keep track of your medical expenses through out this year so you can plan for the next year.
Adjust Your Withholding on Your Paychecks
Depending on your needs and particular situation, you have some choice with your withholding on your paychecks. If you received a big tax refund last year and expect your finances to remain the same this year, you may elect to adjust your W-4 and have less taken out of your paychecks. That means getting a smaller tax refund next year, but having a small bump in your paychecks through out the year.
If you’re expecting a major event this year such as getting married or becoming parents, then you should consider sitting down with your Human Resources Department to update your withholdings.
Thoughts on Preparing for Taxes
I’d love to hear from you about your taxes and finances. How was this past tax season for you? What plans do you have for the rest of 2013?