In order to produce the podcast and keep content up free for you, I work with partners so this post may contain affiliate links. Please read my full disclosure for more info.
Want to make taxes this year go smoother? Learn four easy ways on how to set up and review your finances to have some big money wins this year!
This week on the podcast we talked about getting ready and maybe just a bit excited for tax season.
Naturally, most people don't jump for joy when they're thinking about taxes.
However, there are a few things you can now that will not only make the process less stressful but help you hit your money goals faster!
How to Make Filing Your Taxes Easier
I want to share four key takeaways I got from preparing this week's episode as well as a money tip you can use this week to make taxes just a little less stressful.
Review Your Past Tax Returns
One of the easiest things you can do to get an idea of how to maximize your tax credits and deductions is to review your past returns.
If you use an online program like TurboTax, you can quickly pull it up.
Things to look for include:
- which deductions and credits you took (and which you were close to qualifying for)
- go over your income sources (can you build any of them up?)
- your retirement contributions
Let me give you an example so you can see how this can benefit you.
Let's say that one of you has opted to stay at home with the kids. Have you considered taking advantage of the Spousal IRA for the stay at home parent?
You could be saving now with contributions because it would lower your taxable income. You'd also be helping yourselves later since you're investing.
Go Over Your Work Benefits
Related to your past tax returns, when is the last time the two of you went over your benefits?
There are some fantastic tax-advantaged accounts you could be contributing towards like your 401(k) that can make a huge difference.
Now unless you have a qualifying event like getting married or having a child, you can't make certain changes to benefits like health insurance until open enrollment, but you can start looking at the possibility of adjusting things.
In a less stressed, time crunch environment, you can run the numbers and see if you have the best health insurance plan for you.
You may be in a good spot or you may find that you're spending either too much out of pocket or in premiums for the plan that you have.
For us, when we looked at the numbers and our family's health situation, it made more sense to switch to a high deductible plan.
That's not only lowered our health care expenses, but we've redirected that money into a health savings account, which offers some tremendous tax benefits.
So please go over your benefits to make sure you're maximizing them!
Have a Plan for Your Refund
One of the good things about getting a decent refund is that you have a lump sum, but that also means you need to be smart with how it's used.
Do yourself a favor now and come up with a plan for that money.
Whether it's bumping up your financial cushion, paying down debt, investing, or donating, create a budget for it. You'll be more likely to hit your financial goals faster.
And please don't forget to set aside some money for fun!
Money Tip of the Week: Central Spot for Your Tax Documents
Finally, for your money tip of the week, it's something that's helped us – small but effective. Make sure you have a central location for all the documents that are going to be coming in.
Between the two of us, we have many different accounts and they come in at different times, some early, some. To be honest, late.
You probably are dealing with the same thing.
It's easy to lose them if you're not having a specific spot. So whether it's a folder or a tray, keep it in that area.
And if you use software like TurboTax, what you can do is get started with the documents you already have saved and then updated as more documents come in.
You can tackle your taxes bit by bit. So it might be less stressful with that approach.
If you're looking to not only optimize your taxes but get your finances squared away and want tailored advice, work with a financial planner.
And if you're in the Triangle area of North Carolina, please check out our sponsor Coastal Credit Union.
Don’t forget we also have a Facebook group – Thriving Families -that's focused on helping one another out with our financial goals. Hope to see you there!