As the end of the year approaches, you will need to finish your tax planning so that you can be prepared for the next tax season but for this you will need to know the 6 ways to prepare for tax season. This is the best way of ensuring that you will get the biggest tax refund in the next year and hence you will need to prepare for the tax season properly.
Contribute to your IRA- it is very important that you make contributions to the individual retirement account as it is a tax deduction that you can get. You will need to establish to the regular contribution to your IRA from your bank account on monthly or quarterly basis. You can also get the amount deducted from your account as you will not have to face any hassle of depositing the money yourself at regular intervals.
Review your W-4 withholding- if you have got a large tax refund this year then you will also want to adjust your withholding for the present year. The Hillhurst Tax Group explains that withholding is the tax that is deducted by your employer every month from your pay check. You can also update your withholding by filing for W-4 form with the payroll department and you can do this anytime of the year but you also need to know about the exemptions that you are entitled to.
Undertake ongoing account maintenance- you should never forget ongoing account maintenance and for this your IRA custodian needs to have to recent contact information. This is a way of ensuring that your assets are always in good standing so that you can avoid any kind of potential unexpected taxable events.
Contribute to retirement funds- it is the best way of lowering your taxable income and it also helps you to reduce your potential tax burden for the coming year. You will need to start planning your future retirement as it helps in making reduction in your taxes.
Make charitable donations- before the end of the year, you should make charitable donations as it is the best way of reducing tax liability when you file your tax next year. You should also keep track as well as value your donated items and charitable giving throughout the year.
Update financial information- you should also update your financial information in health insurance marketplace as it enables you to get a tax credit that will be used for paying for the insurance coverage.