Wednesday, October 13, 2021

5 Tips to Help You Plan Out Your Tax Payments

The end of the year is quickly approaching and if you're like most people, that means it's time to start thinking about your taxes. If you haven't already made preparations for this year's tax season, then now is the time to get started. 

In this article, we will go over 5 tips that will help guide you through the process of planning out your tax payments. With that said, let’s jump into these 5 tips.

Start Early

You should start planning out your tax payments as soon as you have a solid idea of how much money you're going to earn for the year. 

This is because your tax bill will change depending on whether you received a bonus at work if any extra income was brought in from side jobs, and so forth. 

If it takes you a little longer to gather up the money you owe, then tax planning as early as possible will give you more time to save.

Consider a Side Job

If you're having trouble saving up enough money for your taxes before the end of the year, then taking on a second job could be what helps get you to where you need to be. 

There are quite a few things that people do as part-time jobs in addition to their day jobs, such as cleaning tables at a local restaurant or walking the dogs in the neighborhood. 

For some extra cash, you could even sell stuff that you no longer use anymore like clothes, appliances, furniture, etc.

Be Sure to File

If you're like most people, then it can be easy to forget about your taxes until the last minute. However, if you do this and don't end up filing them in time for the tax deadline, then there's a chance that you could get hit with some pretty hefty fines. 

Many states will charge you a late filing fee of up to $100, and failing to file could result in the IRS charging you interest on your outstanding tax bill.

Use Your Deductions

If you're going to be paying taxes for the upcoming year, then it makes sense that you should try and minimize what you end up owing. 

This can be done by utilizing various tax deductions available to people who fall into specific categories, such as getting a mortgage or owning a business. 

By taking advantage of these deductions, you could end up saving a significant amount of money on your taxes when the time comes to actually file.

Make Estimated Payments

If you're worried that your tax bill is going to be higher than normal, then it would probably be wise of you to start making quarterly estimated payments

Doing this will help ensure that the IRS doesn't end up charging you late fees for not having enough money on hand when the deadline rolls around. 

The main downside with doing this is that you'll have to set up a payment plan with the IRS and if your income goes down for some reason, then there's also the possibility of having to pay back what they already gave you.

No comments:

Post a Comment

Join 1000's of People Following 50 Plus Finance
Real Time Web Analytics