Next Monday is Tax Day in the U.S. Are you ready? Or have you been procrastinating?
Unless you live in Massachusetts or Maine, your taxes are due by midnight on April 15th, unless you've filed an extension.
Every year, around this time, it's a bit of a mad dash, in our house. Our accountant asked us for months now, to remember to send her a breakdown of our tax deductible expenses, and because I'm someone who needs a deadline, I put it off until the middle of March. My husband and I incorporated last year, so there was also a business filing deadline at the beginning of March. We had to pay taxes on the business, of course, but I wasn't sure what was happening with our personal taxes.
Well, we finally got the numbers back. We owe $986 because we got too much of a subsidy for our health insurance. However, we got a refund from a couple of states. Because last year I worked for Love & Hip Hop Atlanta, New York and Hollywood, I had to file returns in California, Georgia and New York. The refund worked out to be about $865, so at the end of the day, we'll pay $121. In my book, this is a win!
Here are some Tax Tips for you to think about:
- I know you probably love a refund, and believe me, I do too! However, if your refund is over $1000 or maybe $2000, you're not withholding enough! You're giving the government an interest free loan each month, rather than having that money come to you, so you can do whatever you want with it, including putting some of it into savings to pay your taxes, if you need it. The IRS has a withholding calculator you can check to see if you're having the right amount taken out of your paycheck. If not, ask to change your W-4 form.
- Next, to minimize what you owe, you can still put away money into a Traditional IRA, if you qualify for the income limits. If you're under 50, the maximum you can put in is $5500. If you're over 50, you can put away $6500. Also, you don't HAVE to put that much into your IRA, since those are just the maximum amounts, but whatever you are able to contribute is a win-win! You can lower your overall income (that's getting taxed) AND add more to that retirement account I know you've been meaning to open or add into! Remember, you have up to April 15th to open it up (if you haven't already) and contribute, to qualify as this year's tax break. If you're a business owner or a freelancer, you can contribute MORE to a SEP IRA. It's just like the Traditional IRA, but you can contribute more, 25% of eligible income (20% for the self-employed) or up to $55,000, whichever is lower.
- Lastly, I know that most people face taxes with dread each year. Some of you may also believe that the government isn't doing what you want with the money. So, let's shift our thinking around taxes in two ways. 1) Think about it as a way of giving back. It's the same as giving to charity, so that someone less fortunate can benefit. The roads you're driving on are, mostly, not filled with pot holes. There's free education from Kindergarten through high school, so for those who can't afford private school or for those who just want their kids to go to school with the kids in the neighborhood, their children still can get an education. 2) Mentally say to yourself when you pay taxes what you would like it to go towards...do you love nature and having government protected lands? What about the Grand Canyon? Yosemite? Think about your taxes going towards maintaining those spectacular locations, when you file or pay your taxes. I know I will be thinking about those incredible places, as I pay my $121 this year.
Bless the beautiful roads you drive upon. Bless the magnificent system of distribution... there are many areas of appreciation that tie to the subject of taxes. If you allow yourself to bask there a little bit, you would flood some pure positive energy upon this subject. - Abraham Hicks
Next week, I'm going to address what to do with a refund, especially a big refund. If you'd like to keep up with my weekly blog on how to shift your mind from worrying about money to one of freedom, ease and grace, sign up below! If you're interested in looking at ways you can maximize your money and minimize your taxes, let's talk! Sign up HERE for a free personal session. I'm looking forward to shifting our money mindsets together!