Tax Time Tips: Planning & Saving

SHERMAN, Tex. (KXII) - It’s that time of year again, and everyone is thinking about their taxes! Whether you’re still getting ready to file, or you’re waiting for a refund, financial professional Dale McCarty from Retirement Designers Financial Group has some advice on ways to be prepared for Tax Season and make the most of your tax return.

1. For many of us, tax time seems daunting. What are some basic things people can start doing to get ready so they aren’t pushing that final deadline?
• First, get organized. It’s important to get all your documents together now.
• Start gathering those forms – W2 forms, anything you might need to start the process, whether you file yourself or work with a tax professional.

2. For individuals who might be expecting a refund this year, it could be a good time to ask, what are some financially responsible ways to use it?
• If you receive a refund this year, the first thing I recommend is paying down any debts. So, you might want to consider paying down the debts with the highest interest rates. For some people, that would be credit cards.
• The other thing you might want to consider doing with your refund is saving it! You could think about depositing your refund into retirement accounts – like an IRA (individual retirement account).

3. Are there any things that you recommend individuals don’t do with their returns?
• Try not to go on a spending spree, and don’t spend it before you receive the actual check.
• It can be a good idea to have a plan. Take a look at your finances and decide what’s suitable for your situation. That could mean using 1/3 of it to pay off credit card debt, another 1/3 to put into an IRA and the remaining 1/3 to create a savings account for emergencies.

4. Tax refunds can be a nice surprise, but are there some actions individuals can take today that may help set them up for next year?
• Yes, ideally, you shouldn’t be receiving a big refund. That basically means you loaned money to the government. Instead, meet with a professional so he or she can make sure you have the correct withholdings. Then you’ll be keeping more in your paycheck year-round. With that money, make sure you are adequately saving for retirement.
• An experienced tax or financial professional can help you find ways to do that. At the very least though, try and make sure you are signed up for any employer retirement plan and take advantage of a company match.

5. According to the IRS, some may see a delay in the tax refund, as some who claim the Earned Income Tax Credit and or the Additional Child Tax Credit may experience a refund hold – This is an attempt to help fight fraud. What other advice do you have?
• File as early as you can – We’re into March but we encourage everyone to file early due to potential fraud risks. We want to try and be proactive, if a return has been compromised in any way, it’s better to know early.
• Catch Mistakes – Data going into the return can easily have something missed or a number wrong like your social security numbers or numbers from a tax form.
• Future Planning – Start being proactive and try to reduce the risk of being caught off guard.
• We encourage everyone to check with a financial or tax professional to see what’s suitable for your particular situation.
• One important tip is that the IRS does not Call you, Text or Email you – If you get any of these, it’s a scam. Try and verify with the IRS before you take action.