KJ: Now that we’re a little past the halfway point in the year and approaching the final stretch of the year, we thought this article we read is a good summary of ten midyear tax moves to make now. With this year yielding higher taxes for many – whether it’s higher real estate taxes from a rising real estate market, higher Social Security payroll taxes with the expiration of the tax cuts January 1st, Medicare surtax on higher incomes, or higher income tax rates on top earners – it’s more important to plan ahead for the rest of the year and make adjustments to your budget before it’s too late!
Take a look at your withholding (or quarterly estimated tax payments)
Run a few numbers based on the exemptions, deductions, and your estimated income for the year and see if you should consider changing your W-4 form at work to have more taxes withheld if needed. If you have a more complex situation, your CPA can assist you with this, but if your situation is a little bit more simple, try plugging the estimated numbers into TurboTax or building a handy dandy spreadsheet. In the wake of higher taxes, consider contributing more to a retirement plan that you can deduct from your taxes.
The IRS website has a great W-4 estimator to help you with this process, so check it out and see if it can help you with this process.
Finalize last year’s taxes
Whether by choice from extending your taxes or by circumstances of quite a complex tax structure, what better way to focus on this year than to finally get passed last year?
Start your tax file
Begin making your list of tax documents you will need for this year:
- 1) W-2’s, 1099’s from contract work or savings and investment accounts
2) 1098’s for mortgages (don’t forget you may have more than one if you refinanced throughout the year and took advantage of the low interest rates),
4) real estate taxes – did you sell your house this year? Don’t forget you will need information from closing on your home for real estate taxes paid, but you’ll also have a summary for your new home.
Take note of any life changes
Have you had a baby, moved to a new home, moved states (maybe you now GET to pay state income taxes too!…), moved jobs, received a promotion, or anything else that may impact your earnings or tax situation? Now is the time to do a little research (Google is a useful tool, but it’s not a substitute for solid tax advance if your situation is complex) and make any last-minute adjustments while it’s still time.
- What is holding you back from planning for next year’s taxes?
Have you had to make any significant adjustments from last year?
Tell us what you do to plan for your taxes each year.
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