Many taxpayers in Western New York and Warren, Pennsylvania breathe a sigh of relief once their tax return is filed. While filing season may be over, now is actually the best time to begin planning for next year’s return.
The decisions you make throughout the year often have a bigger impact on your tax bill than anything you do during tax season. Here are several smart moves to consider now.
Start With Your Refund or Balance Due
Your tax return can tell you a lot about your financial picture.
Received a Large Refund?
A large refund may feel like a bonus, but it usually means you’ve been giving the government an interest-free loan throughout the year.
If your income and family situation haven’t changed significantly, consider adjusting your withholding so more money stays in your paycheck each month.
Owed More Than Expected?
If you wrote a large check to the IRS or New York State this year, it’s time to review your withholding and estimated tax payments.
This is especially important for:
- Self-employed individuals
- Business owners
- Gig workers
- Investors
- Individuals receiving bonuses or side income
Making adjustments now can help prevent penalties and unpleasant surprises next spring.
Review Your Retirement Savings Strategy
One of the easiest ways to lower taxable income is through retirement contributions.
Review your contributions to:
- Traditional IRA accounts
- Roth IRA accounts
- 401(k) plans
- SEP IRAs
- SIMPLE IRAs
Even small increases made early in the year can add up significantly by year-end.
For many taxpayers, retirement contributions not only help build future financial security but can also reduce current taxes.
Don’t Overlook Your Health Savings Account
If you’re enrolled in a qualifying high-deductible health plan, a Health Savings Account (HSA) can be one of the most valuable tax tools available.
HSAs offer three tax advantages:
✔ Contributions may be tax deductible
✔ Growth is tax deferred
✔ Qualified withdrawals are tax free
If you’re eligible, consider making regular contributions throughout the year rather than waiting until tax season.
Plan Ahead for Charitable Giving
Recent tax law changes have created new planning opportunities for charitable donations.
Rather than waiting until December, consider budgeting your charitable giving throughout the year. This approach can make cash flow easier to manage while helping you maximize available deductions.
Keep detailed records of all charitable contributions and always obtain receipts for larger gifts.
Prepare for Major Life Changes
Many of the biggest tax surprises occur after major life events.
Examples include:
- Marriage
- Divorce
- Having a child
- Adoption
- Retirement
- Starting a business
- Selling a home
These events can affect filing status, withholding needs, credits, deductions, and estimated tax requirements.
The earlier you plan, the more options you’ll have.
Keep an Eye on Changes to Tax Law
Tax laws continue to evolve. Proposals involving tip income, overtime pay, deductions, and credits receive a great deal of attention, but the details often change before becoming law.
Rather than making financial decisions based on headlines, review any changes with a qualified tax professional to understand how they apply to your specific situation.
Tax Planning Is a Year-Round Activity
The taxpayers who are least stressed during tax season are usually the ones who plan throughout the year.
Whether you’re a family in Jamestown, a business owner in Lakewood, a retiree in Bemus Point, or a contractor in Warren, a mid-year tax review can help identify opportunities before December arrives.
At Gleason Tax Advisory, we help clients throughout Western New York and Warren, Pennsylvania stay proactive, reduce surprises, and make informed tax decisions all year long.