Time to Tidy Up - Lessons from Tax Season
- Jim Carlson
- Mar 24
- 3 min read
As winter loosens its grip and spring edges in, many of us in New England turn to clearing out the cobwebs and setting things straight. But while you're airing out the house, it's worth giving your finances the same attention. The recent tax season offers some clear lessons on why a bit of foresight can make all the difference.
Two Tax Tales
Consider these two scenarios:
Alex's April Surprise:
Alex had a banner year income-wise but didn't adjust withholdings or keep tabs on deductions. Come tax time, Alex faced a hefty bill, leading to stress and a scramble to find necessary documents. It felt like the IRS had thrown a late-season Nor'easter, disrupting the arrival of spring.
Blake's Smooth Sailing:
Blake also saw increased earnings but took a proactive approach by consulting with a financial planner early on. By optimizing tax strategies—like maximizing contributions to Health Savings Accounts (HSAs), utilizing flexible spending accounts, claiming dependent care credits, and adjusting withholdings appropriately—Blake filed taxes promptly and without surprises. This foresight allowed Blake to embrace spring with a sense of financial clarity and readiness.
Spring Cleaning Your Finances
Just as we clear out the clutter at home, our finances benefit from regular upkeep:
Reassess Your Budget: Life changes—like a raise, new family members, or shifting expenses—mean it's time to revisit your budget. Ensure your spending aligns with your current goals.
Organize Financial Documents: Moving to digital statements and consolidating accounts can reduce clutter and simplify management.
Review Tax Withholdings: Adjusting your withholdings can prevent unexpected tax bills and keep your payments in line with your actual tax liability.
Maximize Tax-Advantaged Accounts: Contributing to retirement accounts, HSAs, and flexible spending accounts can lower taxable income and bolster long-term savings.
Evaluate Debt and Savings Strategies: Assessing interest rates on debts and returns on savings can lead to more effective financial planning.
Your Partnership with Uncle Sam
While we don't prepare taxes, we believe tax planning is essential. Your relationship with Uncle Sam is one of your most important business partnerships, and we help you manage it wisely.
Seize the Season
Let this spring be more than just cleaning out the garage. Use the momentum of tax season to tidy up your financial plan, set clear objectives, and move into the next season with confidence and clarity. Remember, if your tax season didn't spark joy, maybe it's time to tidy up your plan.
Disclaimer
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