How to Plan for Next Year’s Taxes Today

Tax season may have just ended, but it’s never too early to start planning for next year. By taking a proactive approach to tax planning, you can make the process smoother, reduce your tax liability, and avoid last-minute stress. Here are some strategies to help you plan for next year’s taxes today:

Review This Year’s Tax Return: Start by reviewing your most recent tax return to identify areas where you can improve. Look for missed deductions, unexpected tax liabilities, or any issues that caused delays. Use this information to plan for the upcoming year.

Adjust Your Withholding: If you owed a significant amount of taxes this year or received a large refund, consider adjusting your withholding. Use the IRS Withholding Calculator to determine the appropriate amount to withhold from your paycheck to better align with your expected tax liability.

Maximize Retirement Contributions: Contributing to a retirement account, such as a 401(k) or IRA, can reduce your taxable income and help you save for the future. Make a plan to maximize your contributions throughout the year to take full advantage of the tax benefits.

Keep Accurate Records: Organized financial records are essential for accurate tax filing. Create a system for tracking your income, expenses, and deductions throughout the year. This will make it easier to gather the necessary documentation when tax season arrives.

Plan for Estimated Taxes: If you’re self-employed or have other sources of income that aren’t subject to withholding, plan for quarterly estimated tax payments. Set aside a portion of your income each month to cover your estimated taxes and avoid penalties.

Stay Informed About Tax Law Changes: Tax laws can change from year to year, affecting your deductions, credits, and overall tax liability. Stay informed about any changes that could impact your taxes, and adjust your tax planning strategy accordingly.

Consider Charitable Contributions: Charitable donations are a great way to support causes you care about while also reducing your taxable income. Plan your charitable giving throughout the year to maximize your deductions and make a positive impact.

Planning for next year’s taxes today can save you time, money, and stress when tax season arrives. By reviewing your current tax situation, adjusting your withholding, maximizing deductions, and staying informed about tax law changes, you can take control of your taxes and achieve better financial outcomes. Working with Peggy's Family Tax Service ensures your plan is effective and aligned with your financial goals.