Wondering what to do with your income tax refund? Here are 5 ways to use your tax refund to improve your personal finances. According to the IRS, the average tax refund for taxpayers to the 2018 tax season is just under $2,000. Instead of splurging on a new flat screen TV or other big ticket…
What are taxes?
Most adults need to pay some sort of income tax. There are both a federal tax system and state tax systems. Working adults and those earning other income must pay federal income tax. Some states charge income tax, while some don’t. If you work for an employer, your employer withholds taxes to pay to the federal, and if applicable, your state government.
Why should I manage my taxes?
Paying taxes is a necessary part of life. While we should all pay the tax we owe, there’s nothing wrong with paying as little tax as possible. There are many techniques you can take to reduce your tax liability. Understanding and managing your taxes are vital pieces of your overall financial health and security.
How can I manage my taxes?
Managing your taxes with a professional makes your life a lot easier. A knowledgeable accountant can help you prepare your tax return. They can also help you understand your tax liability. A qualified tax professional can also help you pay less overall, by finding deductions and credits. You should check in with your accountant at least once per year. Changes in your family size, marriage, divorce, or change in income can alter the amount of tax you owe. To avoid withholding too much or too little, you should also talk with your accountant prior to the end of each year, when you can still make adjustments if necessary.
If you have a simple tax return to prepare there are websites and commercially available software that may enable you to prepare your own returns. But, be sure to do your research to confirm you are calculating your tax liability correctly.
Discover professionals in our network
Finding a professional in your area to help you improve your personal finances is another excellent step on your journey to create wealth and achieve financial stability. A professional familiar with taxes, such as an accountant, has first-hand knowledge and experience and understands the ins and outs of the business. They can answer any questions that you may have regarding your unique circumstances and help you customize a strategy that will best fit your financial needs.
Explore our personal finance insights
Stressed out about paying your income taxes? Our tax system in the United States is quite complex. It’s very helpful to work with a qualified income tax professional, such as an accountant. An accountant can help you prepare your tax return and help you understand your tax liability. It’s also important to know and understand…