It’s tax season – are you ready? Filing began Jan. 29 and will go through April 17 this year. That means you’ll get two extra days to file your taxes.
Maintaining a healthy relationship with your money is important. That’s why strategically spending or saving your tax refund becomes crucial. Many people view their refund as money to spend on frivolous things, however, this is a perfect starting point for travel savings or taking a chunk out of your debt. Here are some of the best ways to use your tax return to make the smartest investments:
Pay Off Debt
Pay off your credit card with the highest interest rates first. It is always best to pay down your debt than to try and build unneeded savings. With that said, make sure you have emergency savings before paying off your debt.
Upgrade Your Car
Trade in your old car for a newer version. In order to get the most for your money, don’t buy a brand new car. Instead, purchase one that is a few years older. Also, be sure to weigh all the pros and cons of the car you intend to purchase. Don’t pick the first thing you see on the lot.
Plan a Vacation
No debt? Congratulations, statistics show you’re in the minority of American consumers! Plan a vacation and enjoy a break from the hectic everyday life. There are plenty of low-cost destinations available. Cruises are a great option with great deals and the option to travel the world.
Start a Tuition Fund for the Kids
Start a savings account for your kids’ college education. Start early so that you can help them start their own path with little or no debt once they graduate college. Talk with your financial provider about your options - many parents tend to make costly mistakes while maintaining the best intentions for their kids.
Create Investment Account
Visit with a financial advisor and start investing your money. If you find a compounding interest investment, you can grow your investment rapidly over the next ten to twenty years. It’s always good to start early.
Renovate your Home
Use your tax refund to upgrade your kitchen or make another home upgrade. Put your money to good use and invest in something that will benefit you in the future.
Set aside money for an “in case of an emergency” fund. If something happens with your job, a medical complication or another unexpected costs turn up, you should be able to coast for a couple of months without going to your credit card or line of credit.
Whatever you choose to do with your tax refund, make sure you analyze the pros and cons and make the best choice. Remember, your tax refund might seem like an opportunity to splurge, but making a smart decision and investing in something appropriate to your needs will allow you to splurge much more in the future.
Small business owners can feel added frustration and worry going into every new year. Once the busy holiday season is over, it’s time for business owners (and everyone else) to begin to think about the upcoming tax season. We can help solve your problems as a small business owner and trying to navigate the tax rules and regulations that come along with owning a small business. Here are four tips to help you through the 2016 tax season:
Explore All Possible Deductions
There are many common deductions that can be overlooked. Some of the most overlooked deductions for small businesses are company-related mileage on vehicles, asset deductions, charitable giving, specialty deductions, bad debt, and loan interest. All of these deductions can be found in the 1065 Form.
Avoid Getting Caught Up in Personal Expenses
One of the major concerns of the IRS is that small businesses are writing off personal expenses as business expenses. Keeping these expenses separate will be key in avoiding stress when it is time to sort them during tax season.
Continually Track your Assets
If you keep a record of expenses throughout the year and an organized record of assets and liabilities, you will greatly reduce your stresses come tax season and have a better grip on your finances all year.
Ask for Advice
Especially for a new small business, completing taxes can be a daunting task. Don’t be afraid to ask for advice from professionals or other small business owners. You might not realize which expenses qualify for a deduction. If taxes are not your forte, a good accountant will be the best investment you can make for your business.
Properly tracking finances can make or break a small business. Schlenner Wenner & Co. helps small businesses understand and take control of their taxes and finances (we can help with payroll, too). If you have any questions or concerns about the upcoming tax season, visit our website at swcocpas.com.
It may seem like tax season has just begun, but it will be over before you know it. Staying organized for tax season can help minimize the headache of filing. It’s never too late or too early to set up a system for tracking your tax records, so here are five tips for organizing your taxes.