It’s that glorious time of year again: Tax Time!
At this point, the tax damage is done. There’s not a lot you can do…BUT did you know that the best time to start planning for your taxes isn’t in December? It is now.
If you find yourself in either of these scenarios, here are some actions you can take:
If you are getting a refund from the IRS
Number one, call your HR Department to adjust your W-4 form and raise the allowances you are claiming. This will increase the amount you get on your paycheck (after they get done taxing it).
Number two, raise the amount you are saving into your 401k. Once you do this, your after-tax paycheck will likely go back down to what it “used to be.” You may have to fiddle with the W-4 allowances and 401k savings rate to get the numbers to shake-out. Once you’ve done this, you will save more money into your 401k, pay less in taxes, and your after-tax paycheck should still be about the same! Boom! Painless saving. Granted, you’ll stop getting a refund each year (which is nothing more than an interest-free loan to the government,) but your future retirement thanks you in advance!