Summer is the perfect time to sit down and make sure that you have everything in line for next year'stax season. It marks the halfway point in the year and is a great time to reflect upon your taxes and ensure that you are not scrambling in December to put money away for retirement or increase your tax contributions.
#1 Check Out How Much You Are Putting In Your 401(k)
The first thing that you are going to want to do is make sure that you are putting enough money away in your retirement account. The maximum amount that you are allowed to put into your 401(k) for 2017 directly from your employer is $18,000. However, if you are over 50, you are allowed to save an additional $6,000. This extra cap is designed to allow you to catch up on your retirement if you are older.
Add up how much you have saved over the past six months, and see if you save the same amount over the next six months. For example, if have already saved $9,000, you are on track to hit $18,000 by the end of the year. However, if you have only saved $5,000, you are only on track to save $10,000. You are going to need to increase your savings up to $2,167 a month in order to hit your savings goal.
It is easier to make these changes now, so that you can spread out the amount of time that you have to make these contributions.
#2 Check Out Your Tax Withholdings
Second, you need to check out your tax withholdings. If you got a big refund last year, that means that you were paying too much in taxes. You need to sit down with a tax professional and figure out how you can change your withholdings so that you reduce your tax refund come next April. It may seem off to reduce your refund, but by reducing your refund, you will be able to use more of your money instead of waiting to get it in the form of a tax return.
If you owed a lot of taxes last year, you should sit down instead with your tax professional and figure out if you are on track with your withholdings this year to avoid having to pay extra taxes come next April. Making adjustments right now will make it easier financially than having to come up with a bunch of money you don't have at the end of the year.
Take some time to make sure that you have the right withholdings set-up so you can come as close as possible to not owing anything and not getting a refund next year, and make sure that you are maximizing your retirement contributions.Share