Tax Day is Over. Now What?

For many people, the last month or so of tax season is a mad, frantic rush to get all of their stuff together and figure out what they owe — or are owed. Stress is the norm, and they do this year after year. This year, make a tax season resolution to be better prepared for next year, and to think about your taxes in a way that will bring you the most possible benefit.

Organize your finances

Personal finance software and programs allow you to make note of tax items. Make sure that you keep track of tax deductible items in your personal finance software all year. I also keep a file folder of supporting documents for the year’s taxes. Charity receipts, business expenses and other tax-related items go into this folder. It’s a simple thing, but everything is right where I need it. When my taxes are prepared, all of it goes into a manila envelope along with a copy of my tax return so that my supporting documents are all together.

Reconsider your tax withholding

If you are getting a substantial refund every year, you might reconsider your tax withholding. You can put that money in the bank and earn interest on it all year rather than offering to the government as a free loan. I try to get my tax return to show an amount as close to $0 as possible. Talk to the HR department to re-do your W-4.

Plan for tax deductions

Instead of wracking your brains every year to think of what you could possibly deduct, make tax deduction sleuthing something that you do regularly. Learn about the tax code, and have a basic understanding of what applies to your situation. Those who engage in frugal living and those who make use of coupons and bargain hunting make it a lifestyle. Understand how the tax system works, and then keep track of deductions and make a plan to maximize your deductions.