Moving Beyond Tax Season: What To Do Now
Introduction
Tax season can be a stressful time of year for everyone, but now that you’ve filed your return, it’s time to move on and focus on ways to manage your finances year-round. With the right strategies in place, you can make sure that you’re in a good financial position going forward. In this article, we will discuss some key steps you should take to get organized and make the most of your money now that the tax season is over. We’ll discuss strategies such as understanding your tax situation, organizing your documents, creating an emergency fund, taking advantage of tax breaks and more. Read on to find out how to move beyond tax season and start taking control of your finances.
Understanding Your Tax Situation
Now that tax season is winding down, it’s important to understand your tax situation and what steps you may need to take to maximize your deductions and minimize your total tax liability. Knowing your current tax situation, combined with understanding the guidelines for proper filing and deductions, will help you get the most out of filing your return and help you plan for the future.
Start by gathering all of your tax documents from the year, including W-2s, 1099s, and other forms. Ensure all of your documents are up-to-date and accurate, and if you have any questions or discrepancies, contact the IRS right away. You’ll also want to double check the filing status you’re going to use for the year. There are several filing statuses available, so it’s important to make sure you’re using the correct one for your situation.
Once you’ve gathered your documents and verified your filing status, take a look at your deductions. Make sure you are taking advantage of every deduction you’re entitled to, from charitable contributions to educational expenses and more. For 2019, the standard deduction was increased to $12,200 for singles and $24,400 for married filing jointly, so compare that to the total of your itemized deductions to determine which route is more beneficial for you.
You’ll also want to understand the tax credits available. Tax credits are different from deductions in so far as they are a dollar-for-dollar reduction in your total tax liability, while deductions are a reduction of your taxable income. However, not all tax credits are refundable, meaning they can only be applied against your total tax liability to reduce it to $0, whereas a refundable tax credit can be taken in excess of what you owe and the balance is issued to you as a refund.
Finally, familiarize yourself with the different tax payment options available. You can pay taxes via electronic payment, such as through your bank or through a payment processor like PayPal or Venmo. You can also pay by check or money order, or even in cash if you visit a local IRS office. Knowing the available payment options can help you plan and make sure you pay your taxes on time.
Organize Your Documents
After the hustle and bustle of tax season has come to a close, many people may be feeling a bit at a loss as to what to do with their documents and paperwork. Keeping your files organized may not be the most glamorous task, but it can save you a great deal of time and frustration — not to mention money — down the road. Here is a comprehensive list of steps that you can take to organize your documents and keep track of important information year-round.
First, determine how you want to store documents. The method you choose will largely depend on the volume of paperwork that you have to store. You can organize documents in physical storage such as filing cabinets or storage bins, or you can go digital and utilize digital filing systems. Whichever option you choose, make sure that you have easy access to any important papers or documents.
Second, find a way to centralize your documents. This could be an email folder or shared Google Drive, a filing cabinet or storage bin, or designated folders on your computer. This will make it easier to keep track of paperwork and quickly access the documents you need when you need them.
Third, come up with a filing system that works for you. This could be a traditional system of alphabetical filing, color coding, or a categorization system of your own design. If you’re new to document organization, start small. Use the basics to find what works for you and then expand from there.
Fourth, label everything clearly and include any relevant dates. Labels will help you quickly identify the contents of each file or folder and will prevent mix-ups or confusion. Dates can be especially useful for tax-related documents and any documents that are time-sensitive.
Finally, make sure to shred any documents that you don't need. Add a regular shredding day to your calendar and make sure to commit to it. This will help you reduce clutter and keep your documents secure.
Organizing documents may not seem like the most exciting task, but it can save you time and valuable resources in the long run. With a little bit of effort, you can keep your documents organized and easily accessible throughout the year.
Review Your Tax Forms
Now that tax season is over, it's time to review your tax forms and make sure everything looks accurate. This is a critical part of the tax process and can help you avoid costly errors or penalties in the future. Here are some steps you can take to review your tax forms and make sure you're in good standing with the IRS.
1. Review All Tax Forms Received – Start by reviewing all the forms that the IRS sent you. Double check the information on each form and verify that it matches the information on your income tax return. Make sure to double check that all wage and other income information is accurate and for the most recent tax year.
2. Check Tax Deductions – If you claimed any deductions, you must make sure that you have the proof to back them up. This is especially important if you are using a deduction you haven't used before. Check your supporting documents and make sure they are accurate.
3. Review Tax Credits – Tax credits are a great way to reduce your tax bill. However, you must be sure that the credits you claimed are valid and that they match the information on your return. Verify that the credits you claimed are accurate and that you have proof of any expenses related to the credits.
4. File Amended Returns If Necessary – If you find any errors on your return, you may need to file an amended return. You can file an amended return online via the IRS website. Make sure to include supporting documents and any other paperwork that may be necessary.
By taking the time to review your tax forms, you can be sure that you don't have any errors that could lead to costly penalties or audit. If you find any discrepancies or errors, take the appropriate steps to correct them to avoid further complications.
Managing Your Finances Year-Round
It can be easy to get through life feeling like you have your finances figured out. You pay your bills on time, you have a steady salary, and you can manage your taxes every year. But one of the key elements of financial success is to consistently check in with your finances throughout the year. Whether it is setting money aside each month or planning out a budget to keep you on track, having a good understanding of where you stand financially is key to success.
Just because tax season ends doesn’t mean you can forget about your finances. As soon as tax season is over, start thinking about how you can manage your finances year-round. When it comes to managing your finances, here are a few tips that you can use to get started:
1. Take Stock: The first thing you should do is evaluate your current financial situation. Where do you stand? Are you in a good place or is there room for improvement? This is the perfect time to review your income and expenses and create a budget so you can see where your money is going each month.
2. Create Savings Goals: After you have taken stock of your financial situation, it’s time to establish some savings goals. Think about the long-term financial goals that you have like saving for retirement, saving for a home, or saving for a big purchase. Establishing these goals will help you stay focused and motivated to save throughout the year.
3. Automate Your Savings: Once you have established your goals, it’s important to automate your savings. This will save you time and energy each month, allowing you to stay on top of your savings goals without having to constantly remind yourself. Automated savings can also help you boost your savings by setting aside a certain amount of money each month.
4. Track Your Progress: The key to financial success is to stay on top of your progress. Make sure to review your budget and savings goals on a regular basis. This will help you stay on track and make sure you are making progress towards your goals.
5. Get Professional Help: If you are feeling overwhelmed with managing your finances, it may be helpful to seek professional help. Certified financial advisors can help you create a plan that works for your unique situation and provide guidance and support throughout the year.
Assess Your Budget
Now that the tax season has come to a close, it's an ideal time to take stock of your budget. Regardless of whether you're in the midst of a financial crisis or are simply looking to ensure your future stability, a careful review of your expenses and income can help you identify areas of strength, as well as opportunities for improvement.
A good place to start when assessing your budget is to review your income sources. Start by listing all of your sources of income, such as wages, investments, benefits, or government assistance. This is a crucial step, as it helps to ensure that you are maximizing the potential of all income opportunities.
Once you have identified your income sources, it's time to take a look at your expenses. Start by writing down all of your regular expenses-- rent, utilities, groceries, and so on. Once you have a complete list of your fixed expenses, add up the total and consider what percentage of your total income these expenses take up each month.
Once you have an understanding of your fixed expenses, it's time to take a look at your discretionary spending. Start by listing out all of the items that you purchase each month that are not necessary for your survival, such as streaming subscriptions or dining out. These expenses can quickly add up and should be considered when assessing your budget.
Once you have completed your assessment, the next step is to evaluate and adjust your spending. Consider what areas can be reduced or eliminated, and if possible, try to limit unnecessary purchases. Finally, look for potential areas of savings, such as reducing your utility bills or renegotiating your rent.
By taking a few moments to assess your budget, you can create a better understanding of your finances, identify potential areas of improvement, and ensure that you are properly managing your money.
Make Retirement Contributions
When it comes to retirement planning, one of the most important things you can do is make retirement contributions. With the tax season behind us, now is the perfect time to get started on setting up your retirement plan and preparing for the future.
Making retirement contributions can be done in a variety of ways, such as through employer-sponsored 401(k)s, Individual Retirement Accounts (IRAs), and Roth IRAs. With all of these options, there are different rules and tax benefits to consider, so it's important to understand the differences between each of these types of retirement accounts.
401(k)s are offered by employers and contributions to them are made on a pre-tax basis, meaning that your contribution to the account is not subject to federal income tax. Any contribution you make to your 401(k) is partially matched by your employer, usually up to a certain percentage. It's important to note that contributions to a 401(k) are limited by IRS contribution limits. However, these contribution limits increase each year, and the 2020 contribution limit is $19,500 ($26,000 for those 50 and over).
IRAs are an individual retirement account that you open on your own. With an IRA, you can contribute up to $6,000 each year ($7,000 for those 50 and over) without being subject to tax. There are both Traditional and Roth IRA options, with the former contributing pre-tax and the latter post-tax. Contributions to Roth IRAs are not tax deductible, but earnings from them are tax-free when withdrawn in retirement.
When considering retirement contributions, it's important to understand the rules for each type of account and the different tax benefits associated with each. It's also important to consider your overall financial situation and how much money you can afford to set aside each month. While it may seem daunting to start planning for retirement, taking the initiative now to make retirement contributions will help set you up for a more secure financial future.
Create an Emergency Fund
After you have completed your taxes and received your return, it can be tempting to splurge and reward yourself for all the hard work. But it’s important to remember that while your tax return can help you pay off some debts, you should also be thinking about creating a secure financial future. One of the most crucial steps in ensuring financial security is creating an emergency fund.
An emergency fund is a financial safety net that everyone should have in place. It’s a reserve of funds that you can use in the case of unexpected expenses. These can include medical bills, home repairs, or job loss. The amount you should keep in your emergency fund can vary, but it is generally recommended that you have 3-6 months’ of living expenses saved up.
Creating and funding your emergency fund should be a priority, even if you are trying to pay off debt or save for retirement. It’s important to remember that you can’t predict the future, so it’s better to be prepared for the unexpected.
Here are some tips for creating and maintaining an emergency fund:
• Start small. Start with whatever amount you can manage and make sure to keep saving as you move down your other financial goals.
• Consider automating your saving. This can be done through a direct deposit, an automatic transfer, or a digital savings platform.
• Look at cutting back on spending. Evaluate any unnecessary expenses and think about if you can reduce spending in certain areas.
• Use windfalls wisely. If you receive any tax refunds, bonuses, or other income, consider adding this money to your emergency fund.
Creating an emergency fund is one of the most important steps you can take toward financial security. Even though it may be a bit intimidating to start, it will be worth it in the end to know that you have a reserve for any unexpected costs and can protect yourself against financial hardship.
Maximizing Money-Saving Strategies
Now that tax season has come and gone, it's time to start thinking about ways to maximize your money-saving strategies. Although it can be tempting to wait until the last minute to file taxes, it's important to be proactive in planning ahead. Doing so can help you maximize tax deductions, manage your money more efficiently, and create a sound financial plan that can help you reach your money-saving goals.
The first step in maximizing your money-saving strategies is to determine how much you need to save. Consider your current income and debts, as well as any future sources of income, and use this information to create a budget. This budget should focus on setting priorities, such as essential household expenses and lifestyle expenses. Once you have a budget in place, it's time to start exploring the different money-saving strategies you can use to reach your goals.
To start, consider exploring the different tax deductions you may qualify for. Every year, the IRS releases new tax deductions, such as deductions for home office expenses, charitable donations, and education expenses. Taking advantage of these deductions can help you save significant amounts of money. Additionally, if you're looking to save money on taxes, it's important to understand the tax planning options available to you. Consulting with a financial advisor or tax professional can help you better understand the different tax planning strategies and determine which one is best suited for your particular situation.
In addition to tax deductions, there are several other money-saving strategies you can use to maximize your savings. Consider taking advantage of cash back rewards and loyalty programs when making purchases. These programs can offer you points, discounts, or cash back on making certain purchases. Additionally, many banks and credit cards offer rewards programs that can offer you cash back on everyday purchases.
Finally, consider exploring ways to save on energy bills. Installing energy-efficient appliances, using LED lightbulbs, and unplugging idle appliances can all help you save money on energy costs. Additionally, many utility companies offer incentives to customers who switch to renewable energy sources.
By taking the time to plan ahead and explore different money-saving strategies, you can maximize your savings and reach your financial goals.
Take Advantage of Tax Breaks
Tax season may be over but there are still steps you can take to take advantage of all the tax breaks available to you. Now is the time to look for ways to maximize your tax deductions and credits to help reduce your tax bill. Whether you're an individual or a business, there are a variety of tax breaks that may be available.
For individuals, some of the most common tax breaks are deductions, credits, and exemptions. Deductions reduce your taxable income, while credits reduce the amount of tax you owe. Exemptions are an amount of income that is not subject to tax. Additionally, there are a variety of credits available such as the Earned Income Tax Credit, the Child and Dependent Care Credit, and the Saver's Credit.
To take advantage of deductions, you'll need to get familiar with the various tax rules for itemizing. This involves listing various expenses and subtracting the total from your earned income. Common deductions include charitable donations, medical expenses, and home mortgage interest.
Businesses may be able to take advantage of several different tax credits and deductions. Depending on the type of business you own, you may be eligible for credits such as the Work Opportunity Tax Credit, the Research and Development Tax Credit, and the Small Business Health Care Tax Credit. Businesses may also be able to deduct certain business expenses, such as business travel and promotional expenses.
In addition to the more traditional tax breaks, there are other strategies you can use to reduce taxes such as harvesting capital losses and deferring income. Harvesting capital losses involves selling stocks at a lower price than when you initially purchased, which can reduce your taxable income. Deferring income involves delaying the receipt of income until the following year, which can help you lower your current-year taxes.
By taking advantage of the various tax breaks available, you can reduce your tax burden and maximize your financial wellbeing. Make sure to consult a tax professional to ensure you're taking full advantage of all the tax savings available to you.
Consolidate Debt
Tax season is over. You’ve gotten your taxes done, filed, and are now ready to move beyond the numbers game of personal finance and get a better handle on your debt. There’s a lot of different approaches you can take when it comes to managing debt, but consolidating it is one way to put the power in your hands and simplify the process.
When you consolidate debt, you’re taking multiple debts and combining them into one loan. This has a lot of advantages, including the ability to combine multiple debts with high interest rates into one loan with a fixed interest rate, often lower than the original rate of the debt. This can save you from a lot of interest rate and penalties and help you manage your debt in the long term.
So, how do you go about consolidating debt? You’ll first want to decide what type of loan you want. There are several options when it comes to consolidating debt, including personal loans, home equity loans, and balance transfer credit cards. Each of these methods has its own pros and cons and may be more or less suitable for your situation.
You’ll then want to investigate the various lenders who offer debt consolidation loans. It’s important to compare interest rates and fees, as these can have a big impact on your payment plan. Once you’ve picked a lender, you’ll need to submit an application. If your credit is good, then you’ll likely get approved quickly and you can begin the process of consolidating your debt into a single loan.
It’s also important to remember that consolidating debt isn’t a magic pill, and it won’t make your debt disappear. It’s a tool that can help you better manage your debt and make more affordable payments over time, but you’ll still need to be disciplined in order to stay on top of your payments and keep your debts in check.
Moving beyond tax season and consolidating your debt is an important step towards financial freedom. Take the time to research your options and find the best solution for your situation. Doing so will help you stay on top of your debt and take control of your financial future.
Research Benefits and Credits
As the tax season comes to a close, it’s important to be proactive and consider the various tax benefits and credits you may be eligible to receive. Tax credits and benefits can often help lower your tax burden and maximize your tax deductions. Luckily, there are a few key steps you can take to ensure you get the most out of them.
First, research the various tax credits and benefits you are eligible to receive. The IRS website is a great place to start, as they provide helpful information to taxpayers in order to help them identify available credits and benefits as well as the requirements to meet them. Additionally, many states also offer their own credits and benefits, so be sure to research any applicable credits in your area and what you need to do to qualify.
Second, ensure you’re meeting all the necessary requirements for any tax credit or benefit you apply for. Different credits and benefits may have different requirements, so it’s important to familiarize yourself with the specifics of each. Be sure to double check that you are meeting all the requirements or else you may miss out on credits or benefits you’re otherwise eligible to receive.
Third, take the time to maximize any eligible credits or deductions. There are often limits on the amount of certain deductions and credits for which you can qualify, so it’s important to maximize these as much as possible. Furthermore, certain credits and deductions may have time limits, so be sure to be aware of these deadlines and get your paperwork in on time.
Finally, check in regularly with your tax professional. Meeting with a qualified tax professional can help greatly in understanding the taxing process, as well as identifying and maximizing available credits and deductions. Furthermore, your tax professional can help you develop a tax strategy for the coming year, as well as manage any tax-related benefits or credits you may be eligible for.
When it comes to tax credits and benefits, knowledge is key. Taking the time to research and understand your eligibility, as well as ensuring you meet all necessary requirements, is essential in order to make sure you’re getting the most out of your tax return.
Conclusion
Tax season is an important time of year for all individuals. But it should not be our only focus for financial planning. By taking the time to organize our documents and understand our tax situation, we can manage our finances year-round and ensure that our income is maximized. Through retirement contributions, emergency funds, and money-saving strategies, we can protect ourselves against future financial uncertainty. Additionally, we should take advantage of tax breaks and credits in order to consolidate debt and minimize our financial burden. By being proactive, we can move beyond tax season and plan for a stronger financial future.
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