Anticipate 2017’s tax bill now

Wouldn’t it be nice to get a tax refund next year or at least break even? For most people that seems like a reasonable expectation. Especially after seeing how much money is deducted from your paycheck every month. Realistically, it doesn’t just happen. You need to plan early in the year to make sure you don’t end up owing money. Here’s a few things to help you prepare for Uncle Sam in 2017.

What’s your tax strategy?

There are two guaranteed things in life – death and taxes. You know April 18th is coming, so you may as well get ahead of it by determining your intended tax outcome. What’s your tax time preference? Are you ok owing the government next year? You’ll have more cash upfront throughout the year, but make sure you can cover the bill in full at tax time. Or, do you want a tax refund? You’ll see a little less on each paycheck, but at least you won’t need to worry about coming up with the funds to pay a big tax bill. Or maybe you prefer to break even. Whatever scenario fits you, now is the time to get some good tax advice so that you can ensure the outcome you desire. Be sure to consult a tax professional and build your budget accordingly.*

Create a plan

Sit down with a tax professional and share your tax strategy. Together, you can determine the proper amount of exemptions to claim given your unique circumstances. Claiming exemptions allows you to keep as much of your money as possible, but your chances of receiving a refund are reduced by the number of exemptions you take. That’s why it’s important to look at your total financial picture to determine the right plan for you.

Save, save, save

Whatever your tax strategy is now could change in a few months. What if you planned on withholding with zero exemptions, but end up needing some more cash upfront? You might then claim an exemption or two, and that will likely increase your tax bill the next year. Save as much as you can and focus on having a nice-sized savings account in case you need it. Don’t forget, contributing to your 401(k) chips away at your taxable income at the end of the year. Contribute to it and find out how much your employer is willing to match.

Travis Credit Union offers a variety of Savings Accounts to help you reach your goals and prepare for a rainy day. Visit our website to see which one is a right fit for you.

Savings Accounts

*Travis Credit Union does not offer tax advice. For official tax advice, please consult a tax professional.