Being proactive to lower your taxes is a year-round job. I know it. You know it. But what are you doing about it now instead of waiting until December and you’re out of time?
This article offers some helpful tips to be in good shape by the end of the financial year. By tackling a tip or two per month, you’ll be more tax proactive and less tax reactive.
Tip #1 – ASAP: Reduce Your Debt
Between Black Friday, Cyber Monday and the December holidays, the last two months of the year are two of the worst for piling on debt. So be sure to start reducing your debt now by scrutinizing what you’re buying and what payment card to use when making your purchases.
Instead of using your credit card for everything, try using your debit card to instantly pay for the stuff you use every day. Review what you spend for client entertainment, car maintenance, office supplies and clothing. Look over your expenses and think of how you can cut back on spending and debt to take control now. Then, when the holiday bills come, you won’t have sticker shock.
Tip #2 – Save As Much As You Can
We all want to save as much as possible for our retirement every year. But surplus cash can often be in short supply when you need it most. That’s why you need to look for more creative ways to save by saving regularly.
Of course, it would be ideal if you could put aside a certain amount each paycheck or each month for retirement. Or if you’re maximizing your annual retirement contribution, talk to your accountant about investing in another option such as a tax-deferred annuity. For that particular type of investment, you won’t earn a tax deduction but you won’t pay taxes on the income until withdrawing funds years down the road when you’re retired.
Tip #3: Talk to Your Financial Advisor Soon About Your Investments
Between now and the end of the year––but sooner, rather than later––talk to your accountant to review your portfolio so you’ll be in good shape at the end of the financial year. Ask yourself if you should buy or sell. Should you invest more in gold or overseas? Should you be more liquid or move into Certificates of Deposit?
Tip #4: Look at Improving Your Credit Score
Did you know that you could improve your credit score by not cancelling old credit cards? It’s true. There are many other ways to add up to a higher score, so review your FICO score with your financial advisor or accountant. Look closely at any delinquencies you may have in your account.
Also, review how many new accounts you’ve opened recently, what your balances may be on revolving credit lines, and if you have any tax liens or inquiries. If you take the right action now, you can improve your credit score fairly quickly. A good credit score can give you better interest rates on your credit overall.
Tip #5: Talk About Your Taxes
Let’s schedule a call to discuss and re-estimate your annual taxes. We both know that these can change often because of a number of factors like a job change, a promotion, a move, or a layoff.
If you got a generous refund this year, it’s time to lower your estimates. If you paid more than you’ve paid recently in taxes, it’s time to raise your estimates. You can also increase your deductions of charitable goods or prepay some expenses that may be tax deductible.
Have You Enjoyed These Tips to Be in Good Shape at the End of the Financial Year?
If you’re tired of paying too much in annual taxes, it’s time to schedule a consultation. Please contact me today to discuss your bookkeeping, accounting, and tax planning for 2017 and beyond.
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