Chances are, you have just finished or are finishing up filing your taxes for 2017.
Whew! It’s over!
Until next year!!
This time of year is stressful:
Waiting on your W-2s, 1099s, and other documentation that only shows up once a year. Realizing how much of your annual salary that you worked so hard to achieve was paid out in taxes last year. Dreading the amount of paperwork. Looking the whole house over for receipts and statements. Ensuring every possible deductible business expense and mile driven was recorded. Making last minute contributions, medical appointments, and use of childcare services to avoid missing out on any qualified deductions and credits. Nervously completing forms in hopes that you are doing everything correctly. And then the kicker – am I getting a refund or do I owe Uncle Sam.
And now the rules are changing?!
It all adds up to a feverish frenzy in the months of March and April!!
What if we make a plan now that will avoid some of the stress in 2019, so we will actually get to stop and smell the roses when they begin blooming next spring.
We all know we could be more organized. Let’s start there. For many, the standard deduction will be so high next year that you might not itemize, but keep everything anyway just in case. This will require a system of record-keeping, but a simple set of folders will do. Some common deductions that you may qualify for and therefore should keep records of include:
- Medical, Dental, Vision Expenses
- Health Savings Account Contributions
- Childcare and Dependent Care Expenses
- Educational Expenses
- Home Expenses
- Contributions to Charities
- Self-Employment Expenses
- Job-Related Expenses
- Taxes Paid
Just make a place to categorize them as they occur, store them there, and forget about them. Fifteen minutes of assembling will save hours of searching after the new year.
But let’s dig deeper. Get a real plan together, one that is better by design. Decide now what our goals are for the coming year. After all, do we know what we want to contribute to our HSA next year? What medical costs can we expect? How much would we like to give to church and charities? Would we like to renovate a room in our home? Is this the year to start our own business? What are our options for childcare and support with dependent family members? Which preschool/grade school/college is the best choice for our child?
These are great questions and the answers can inform us as we consider our comprehensive financial picture. We can make filing taxes simpler, but we can do so much more! We can endeavor to make all of our financial decisions less stressful by determining today what our goals are and have a strategy in place to best achieve them. In so doing, we will be more efficient in our tax planning.
As fiduciary financial planners, our job is to examine your finances in an all-encompassing manner so that we help you define your goals, analyze and evaluate your current status, and develop recommendations to help you reach those goals.
If your dream is to pay off your debt and save for a home of your own, the time to start paying it off is today. It takes planning. If your desire is to send your children to college or to retire by a certain age, the time to start saving is today. To determine amounts and timings of contributions and do it tax efficiently takes planning. Did you know that you might be able to make enough charitable contributions to deduct and itemize them by batching your charitable giving? It takes planning. We can accomplish more of our financial goals faster when we keep more of our paycheck and don’t give Uncle Sam a loan. This, too, takes planning. In the end, it is all about making wise choices with what we have been given.
And we have been given much. When I find myself complaining about taxes, I must remember where much of our tax money is spent: education, public assistance, technology, state and national defense, Social Security to include Medicare and Medicaid, unemployment services, and so much more. My life would not be the same if there were no taxes. I would not be able to use some of the transportation that I use. I would not have had the same education I was provided. I would live more fearful for my ongoing safety.
So, I am going to prepare ahead of time so that next year is not as stressful. And I am going to count my blessings.