- Do a quick analysis
Take a few moments and utilize a tax calculator to estimate your taxes. The Internal Revenue Service (IRS) has a withholding calculator that can quickly estimate your expected tax liability. Using information from your last paycheck, projected profits from self-employment and rental activities, current deductions and much more, you can get a good idea of what you may owe or what you can expect to receive.
- Zero out your spending accounts
Don’t forget that you have until December 31st to utilize your flexible spending accounts (FSAs). Flexible spending accounts allow individuals to save tax-free money for medical and dependent expenses.
In most cases, these accounts are known for their “use it or lose it” rule, which means you have until year-end to pay for qualified expenses. While there are some employers who may allow for a grace period or carryover, it is important to check.
- Accelerate deductions
Why wait for January 1 to pay for certain expenses? If you own real estate consider paying your property tax bill or prepaying your mortgage before year-end. If you are a business owner, determine whether you have equipment needs and consider making these purchases now.
Also, consider other deductions as well. This is a great time to contribute to your favorite charity. You could pay for professional licenses, dues and other business related expenses. Making these extra payments before year-end will allow you to accelerate deductions into the current year and reduce your tax bill.
- Get organized
Lastly, if you are simply all over the place, take this time to get organized. If you haven’t yet, check out my financial planner! Set aside thirty minutes or so, to simply take time to get a handle on your paperwork. Review and organize financial records, such as bank statements, insurance records, possible tax deductions and receipts. Put a system together to help you get ready for the New Year!
Remember, your choice, your future!