Tax Day: Getting Ready For Next Year

If you have waited until today to pay your taxes (or file for money back), you are probably wondering why you waited until the last minute. Again.  (Incidentally, I don’t wonder this; I get everything ready to go and then don’t mail it til the last day. It’s purely psychological. It sort of makes me feel better.)

But there are some things you can start doing now to ensure that next year’s Tax Day isn’t quite so onerous.

• Get organized. Look through your tax return. What sorts of things are you deducting or getting credits for? Throughout the year, keep receipts from charity donations, home office expenses and other information in one place. Just automatically file it there. That way you’ll know exactly where to go for this information next year.
• Pay more throughout the year. If you work for someone, and you still end up owing, talk to human resources. See about re-doing your W-2 form to take out more money for taxes each month. If you have a home business, get the forms necessary to send in quarterly payments. This will make the blow much smaller, as it is spread out.
• If you’re getting a lot back, also go to HR. While it is nice to get a fat tax return, if you can adjust your withholdings, you can be in better shape. Rather than putting that money uselessly by, you should put it in an investment (even if it’s nothing more than a high-yield savings account) to earn interest. But be warned! If you actually owe money, hording it may backfire, since the IRS can demand the interest on it.
• Consider your filing options. Look at what you did this year and see what you could have done differently. Would it have made a difference to go from sole proprietorship to LLC? Will you be able to claim the same number of dependents next year? These are all considerations.

Finally, two things to consider for this year:

1. If you need to file an extension, head to www.irs.gov.
2. If you want your “economic stimulus” tax rebate, you have to file a tax return — even if it’s not something you normally do.

image credit: sxc.hu