Several years ago our taxes got pretty complicated, at that time I also lost track of what an accountant was doing with our taxes. I'm not saying he was filing falsely or anything, just that I didn't even know we were taking a standard deduction. This isn't a huge deal, you can live your life the same with or without that information BUT if you aren't itemizing - you get nothing for charitable contributions (except the satisfaction in your heart) and other itemizable decisions. Knowing this fact can free you to do what you might not otherwise do, like gifting things to a neighbor whose house burned down instead of taking it to Salvation Army who could give you a receipt for the donation.
If you are getting any kind of refund, you really should look at your taxes and identify how much you paid in compared to how much you are getting back. I like the idea of a small refund because that means I'm not scrambling to get funds together to pay for this. You should not get much though, otherwise you could be benefiting from or saving that money throughout the year. A $1,200 refund could be turned into $100 extra each month in your paycheck. Check with your paycheck folks to see about updating your w-4 information to withhold properly. It is possible to pay no taxes in and still get a return - if you find yourself in that truth, just be grateful and accept a big refund. It is possible though to write exempt on your W-4 if you consistently get everything back that you pay in. You may still get a large refund but then you are keeping all of your money you can in your monthly budget. If you find yourself adjusting your W-4 to keep more money - direct deposit it into your savings or retirement. What you didn't have you can live without for now, right?
Read more in an article by Dave Ramsey: Are You Missing Out on $86,000?
Another great Tax article on being ready and getting it right: Prepare your taxes all year
Image courtesy of Arvind Balaraman FreeDigitalPhotos.net
This is some great practical information. Thank you for linking up with Tending The Home Tuesdays!
ReplyDeletei do our taxes every year and it is really helpful to know as much as possible!
ReplyDeleteKathy and Lindsey! Your link ups are wonderful. It's a great place to get to hook up with other bloggers and find resources. Thank you so much for stopping by!
ReplyDeleteCarissa - it's interesting to see someone else do your taxes to compare what they put here and there. I've learned a lot by asking questions each time.