The one certainty in life is that things don’t always go as smoothly as planned. For many of us, April 15th, known either famously or infamously as Tax Day, is the perfect example. But even with the three-month extension, if things aren’t going your way on this return, there are always lessons to be learned for next time.
Watch your withholdings. If you work for someone else, your tax withholdings from your paycheck will go a long way in determining whether you receive a refund or owe a balance. Keep careful watch throughout the year, and don’t be afraid to make changes if you don’t like what you see.
Carefully track your expenses. If you’re in business for yourself, make sure to keep tabs on your expenses. Know what expenses you can and can’t deduct and keep good records. If the IRS takes an unhealthy interest in your business, those records are your best defense.
Plan for your retirement. Even if you’re young, there’s no time like the present to get started. Most retirement plans rely on the multiplicative effect, meaning the earlier you invest in a good plan, the more time your money has to grow. There are also tax benefits. The money you put into most retirement plans is tax deferred. So, the more you put in (up to certain limits), the less tax you’ll pay next year. It really is a win-win.
Even if the results on this tax return leave us with a bad case of the spring blues, there’s no reason we have to put up with the same thing next year. Keep these tips in mind, so you can celebrate Tax Day with a song in your heart.