Preparing for tax time is especially important if you are just starting out in the work force and you happen to be a parent.
6 Steps in Preparation For Tax Time
1) Employing tax planning options will boost your finances in the long haul. Start with an efficient tax documentation system to keep away from hunting for that one receipt at the last minute. All important documents, receipts and records need to be kept in one central location so that you can easily lay your hands on them whenever tax time rolls around.
2) Get the most of all the investment opportunities that are offered by your job. If your employer will match your contributions to a 401k plan, get the most from that opportunity.
3) Keep some funds hidden away for medical expenses. If you have had the misfortune of having to spend money on health care over the previous year, make sure that you have a detailed account of each of these expenses as this can lead to further tax savings.
4) Don’t forget the child tax credit. Yes, your children are going to cost you some money for the first 18 years of your life (and beyond) and so, it is important to get the tax credits for them while you can.
5) One of the best actions you can take for your wallet is to spend, save, and invest your money intelligently. In the event you absolutely do not have to open a credit card account, you should not do so. Although oftentimes credit is necessary, it is far better to be debt-free and to save for the large purchases that are necessary in life. If you are a parent, then you already know that there will be some large expenditures down the road. It is better to save now for those upcoming events than to have to use credit when the time comes to pay up!
6) View your finances like the bank does. This signifies that you should figure out exactly what you are investing in and what your return on that investment will be. Make certain that you save any extra money that you make from your investments and then perhaps put it aside for unexpected expenses.
Don’t permit your personal finances get to you, clear your head, and then realize that it is time for you to tackle the problems that you face. The more prepared you are, the better your chances will be that you do well come tax time.
David Milberg is an investment banker from NYC.