Get Set Up for Less Stress at Tax Time Next Year

While you perhaps breathed a sigh of relief that it was over, experts began tax planning for 2020 right after the 2019 tax season ended (if they hadn’t started before). It’s okay if you didn’t start thinking about next year’s taxes that early, however, are still things you can do during the last quarter of the year to set yourself up for a less stressful tax season next year and the “5 Ways to Boost Next Year’s Tax Refund Now” offers tips.

Look at your tax deductions: If you find yourself in a tizzy each year trying to get all of your receipts and documentation together to file, why not start now? If you throw receipts into a shoe box, you can start to organize or categorize them now. If your documentation is already organized, look over it to see that it is correct. You can also read up on tax deductions that were eliminated with the 2018 tax reforms to see if there is documentation you do not need to save. Every bit you do now will save you time later.

Check your withholding allowances: Many of us never think about a W-4 once we sign our initial paperwork for a job but if you owed money last year, you might want to take a look. 

The article mentions that “Reducing your withholding allowances will increase your income tax withholding so your paycheck will be less, but the payoff will come next spring when you don’t owe money and you may even get a tax refund instead.”

Look for possible tax credits: Just as you need to see how tax law changes may have affected the deductions you can take, you also need to check for possible tax credits. For example, the Lifetime Learning Credit allows people at certain income levels to get a tax credit of 20% of tuition expenses for college-level classes.

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Claire Emory, MBA, CFA, CFP®

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