Early Tax Planning: The Secret to a Bigger Tax Refund
What Is Tax Planning and Why Do You Need It?
You know that feeling you get when your return overpayment hits your bank account? The rush of excitement as you think about what you’ll do with that extra cash. Maybe you’ll take a vacation, pay off some bills, or make a down payment on something you’ve been wanting. Whatever you choose, getting a big overpayment always feels like winning the lottery.
What if I told you there are some simple steps you can take now to increase your overpayment of taxes next year? By doing a little tax planning before the end of the year, you can make sure Uncle Sam takes less of your hard-earned money. The secret is making the right adjustments to your income and deductions, such as the standard deduction, and your filing status so you get to keep more in your own pocket and less in the government’s.
Does having an extra $500, $1,000 or even $3,000 coming back next year sound good to you? Of course it does! Who wouldn’t want to get a bigger check from the IRS? By following a few tax planning tips now, you’ll be well on your way to boosting your overpayment of taxes and having that winning feeling again next year. Keep reading to find out how you can get started today on planning to put more money back in your bank account when the next return filing season rolls around.
How Early Planning Can Increase Your Overpayment
Want to get the most money back possible? The secret is starting your tax planning early! By reviewing your financial situation now instead of waiting until the end of the year, you can make smart moves to lower your taxes and increase the money you have coming back. You can use our tax refund estimator to make sure you’re on track.
Isn’t it exciting to think you could get more money back just by planning ahead? Here are a few ways to boost your refund with planning software.
- Contribute more to tax-advantaged accounts like an IRA, 401(k), or HSA. The more you put in now, the lower your taxable income and the less you’ll owe in taxes. Cha-ching!
- Look for deductions and credits you may have missed. Things like charitable donations, energy-efficient home improvements, or education credits. Find ways to spend money now on things that will reduce your taxes later.
- Ask your employer to increase your withholdings. Having more money taken out of each paycheck means more money back when you file. It’s an easy way to force yourself to save, and the reward of a substantial refund check feels so good!
- Meet with your CPA or return preparer. They can review your unique situation and find custom ways for you to reduce your taxable income. Their fee may even be deductible on your return, so you get helpful advice and lower taxes. Win-win!
By making a few smart tax moves now, you’ll be rewarded when filing season rolls around. While others are rushing to file at the last minute, you’ll be eagerly anticipating your big, fat check for overpayment of your taxes. Start planning today for your most tax-efficient and wealth-building year yet!
Use an Online Tax Refund Estimator to Set a Target
Want to get the biggest refund of taxes possible? Start planning now! The earlier you begin, the more opportunities you’ll have to reduce your tax burden and move to a lower filing bracket. The IRS adjusted tax brackets 2023 for inflation that may affect you.
One of the best ways to determine your target refund amount is by using an online tax refund estimator. These free calculators allow you to input your income, deductions, and credits to get an estimate of your potential refund. Aim high – you might be surprised at how much you can get back by claiming all eligible deductions and credits, including tax forms!
Some of the most overlooked money savers are retirement account contributions, charitable donations, and dependent care credits, which all lower your taxable income. Make contributing to your IRA or 401(k) a priority, and save receipts for all charitable giving. If you pay for childcare or care for an elderly relative, don’t miss out on the dependent care filer credit.
Homeowners, you’re in luck! Mortgage interest, property taxes, and energy-efficient home improvements can mean major deductions on your federal income tax. Make extra mortgage payments before December 31st to increase your interest deduction. Pay property taxes and make any home upgrades that qualify for energy credits as soon as possible.
By planning ahead and using an online tax refund calculator, you can set a target refund amount and take action to achieve it. Put in the effort now, and you’ll be rewarded when your big, fat check arrives in the mail! Or, better yet, use direct deposit to a bank account to get that tax return overpayment faster. Plus, it’s safer too. With some strategic moves, you can make your tax refund something to really celebrate this year.
Review Your Tax Withholdings Now to Avoid a Surprise Bill Later If You’re In A Higher Tax Bracket
Want to get more money back next year? The secret is planning ahead and making adjustments to your withholdings now. Tax professionals can help you navigate the complex tax code and find deductions and credits that you may have missed that reduce your taxable income. The more you have withheld from each paycheck, the less you’ll owe—and the bigger your refund will be.
Double check that your employer is withholding enough in federal and state income taxes from each paycheck. The IRS website has a handy “Tax Withholding Estimator” tool to help you determine the right amount for your situation. If too little is being withheld, increase your withholdings now to avoid an unexpected bill for taxes next April.
- Are you paying off student loans or high-interest debt? Increase your withholdings and use your overpayment of taxes to make extra payments.
- Did you get married recently or have a baby? Life changes often mean changes to your tax brackets 2023
- Update your withholdings to reflect your new family status and other tax information..
- Do you have income from freelancing, investments or a side gig? That additional income also needs to be accounted for. It’s possible that it may put you in a higher tax bracket. Raise your withholdings to cover the taxes on that income.
What is the best tax planning software?
The best tax planning software depends on your individual needs and preferences. Some popular options include TurboTax, H&R Block, and TaxAct. It’s important to research each one to determine which offers the features you need and fits within your budget.
The more proactive you are about your taxes now, the less reactive you’ll need to be later. Take an hour to review your tax situation and make any needed adjustments to your withholdings. Your future self will thank you for getting more money back and a smaller bill for taxes. The peace of mind that comes from knowing your taxes are in order is worth the effort and info.
An unexpected financial surprise is no fun. But with some simple planning today, you can avoid unwanted surprises at filing time and possibly end up with a more sizable return. Review your withholdings, account for life changes, and plan ahead—that’s the real secret to financial happiness! Don’t forget to keep track of important dates and deadlines throughout the year to ensure a smooth and stress-free filing season.
Look for overlooked deductions and credits and Keep Receipts
Did you know that the average refund is over $2,800? That’s a lot of cash left on the table if you’re not
claiming all the deductions and credits you’re entitled to. The good news is, it’s not too late to find more ways to lower your tax bill and boost your money back.
As the year winds down, take some time to review your records and see what you may have missed. Things like charitable donations, medical expenses, mortgage interest, and dependents can all translate into deductions and credits. Even small amounts add up, so gather those receipts and total up your eligible expenses. You’ll be surprised how much you can claim!
Some other deductions that lower your taxable income to explore:
- Job-related expenses like uniforms, supplies, and continuing education.
- Energy-efficient home improvements like solar panels, windows, insulation, etc.
- Teachers can deduct up to $250 of unreimbursed expenses on supplies.
- College tuition and student loan interest. The American Opportunity Tax Credit can be up to $2,500 per student!
- If you have gig income, you can deduct tax software on the Schedule C form.
Don’t forget about tax credits, which reduce your tax bill dollar for dollar:
- The Child Tax Credit – Up to $2,000 per child under 17.
- The Child and Dependent Care Credit – Up to $1,050 for child care expenses.
- The Retirement Savings Contributions Credit – Up to $1,000 for contributing to an IRA or 401(k).
By looking at your records with fresh eyes, you’ll likely find new ways to lower your taxable income and taxes, plus boost the amount you’re getting back. And the best part is, the more deductions and credits you claim, the less you end up paying in taxes overall. It’s a win-win! So grab your records and get to hunting—there’s money to be saved! An enthusiastic and methodical review of your expenses can lead to big rewards. Happy hunting!
FAQs: Why Should I Plan My Taxes Early?
Planning your taxes early has some major benefits. Here are a few reasons why you should start planning now instead of waiting until the last minute:
Bigger IRS Refund On Your Tax Return
The earlier you start, the more opportunities you have to find deductions and credits to lower the amount you owe or increase the amount you’re getting back. Go through your records and look for anything that qualifies, like charitable donations, medical expenses, or energy-efficient home improvements. The more you find, the less you’ll owe or the bigger your refund will be.
Less Stress
Doing your taxes at the last minute often means long hours of gathering paperwork, filling out forms, and trying to make sense of it all under pressure. Start planning early and you can take your time, ask questions, and ensure everything is done properly without unnecessary stress or headaches.
Avoid Mistakes
Rushing through your taxes increases the chances of making errors that could delay your overpayment or result in penalties. Starting early gives you the time to double check that all information is correct and your deductions and credits are legitimate. It also allows you to ask a CPA or return preparer to review your return for any mistakes before filing.
Consider Other Options
If it looks like you may owe taxes this tax year, you’ll have more time to explore ways to reduce or defer what you owe, such as increasing deductions or retirement account contributions. You can also set up an installment agreement with the IRS to pay over time if needed. Waiting until the deadline limits your options and flexibility.
The benefits of early tax planning are clear. Make this the year you start planning ahead – your wallet and sanity will thank you! Get organized now and you’ll be rewarded with a bigger over payment, less stress, fewer errors, and more control over what you owe. The secret to filing season success is simple: start early!
Conclusion
You’ve learned the key benefits of tackling your taxes early. Now it’s time to take action and reap the rewards. Start organizing your return documents now so you have everything in one place come filing season. Look for deductions and credits you may have missed in previous years. Remember, every deduction you find can lower your taxable income and your taxes.
Talk to your CPA or return preparer about ways to maximize your return. The sooner you start planning, the more opportunities you’ll have to keep more money in your pocket. What are you waiting for? Make this the year you get the biggest overpayment possible by putting in the work ahead of time.
You’ll be glad you did when that money arrives at your bank or the extra cash hits your bank account. Early tax planning for individuals pays off, so get started today! The secret to success is simple: start early and you’ll end happy. End of year tax planning usually accomplishes nothing but stress and needless expense. If you can do it by yourself…great. Don’t be ashamed to ask for help if you need it! No point in paying Uncle Sam more than he’s entitled to.
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