5 Winter Money Habits to Make Tax Season a Breeze

5 Winter Money Habits to Make Tax Season a Breeze

Be honest. Is this you: Every year when it’s time to file taxes, you’re scrambling like a maniac trying to find everything you need to file by April 15th? Ugh, how stressful! Tax time doesn’t have to be a manic, anxiety-inducing process. In fact, the earlier you start implementing habits to make for a successful tax season, the better off you’ll be.

But trust me, I get it. You think you have plenty of time, only for time to fly by and once again, you’re scrambling. Well, let’s vow to be done with those old ways! Winter is the time to be getting prepped and ready for tax time. Keep reading for 5 winter money habits to make tax season a breeze. Yes, it’s very doable!

#1 Catching up on your IRA deposits
Did you know you have until March of the following year to get your IRA deposits completed for the current tax year? But, why wait and shell out all that cash at once? Make it a point to split your deposits equally throughout the year. $6000 per year means $500 per month. Add this into your budget if possible.

If saving throughout the year doesn’t work out as planned, reviewing your deposits in the winter time and catching up while you can will still be beneficial. Again, we don’t want to wait until the deadline to make a large deposit. The earlier you start catching up on your deposits, the better!

#2 Doing a donation run (or tracking past donations)

If you typically itemize your deductions when filing your tax return, then donations can be a HUGE help. Have you been donating throughout the year? If so, spend some time in the winter months tallying up everything you’ve donated. Trust me, this will come in handy when the time comes to file your tax return.

If you have been meaning to donate but haven’t gotten around to it, make sure you do your drop-off before the year ends, so it can be used as a tax deduction. You’ll want to keep tabs on the value of everything donated. Most donation companies have a standard flyer they hand out with their tax-related information – make sure you grab one!

Do you typically take the standard deduction? If so, donations won’t help you much with taxes, but you can reduce clutter, lighten the stuff you have and feel good about helping those in need. You don’t have to donate just for the tax benefits. There are a lot of other benefits that come with it.

#3 Organizing your financial documents
Have you been meaning to get a financial filing system in place but haven’t gotten around to it? First, listen to this CGS podcast episode: Setting Up Your Financial Filing System. Second, block some time out on your calendar to get it done! Not just for tax preparation but for plain organization!

Stressing out and trying to find important financial documents is never fun to deal with. Instead, create a system for organizing your financial documents. If you can create a process during the winter months to get your documents categorized and organized, tax time will be a breeze.

Break out a folder and label it to match the current tax year. Start putting documents in that folder so at least everything is in one place. Then, spend some time going through the documents, adding labels or sticky notes to help categorize everything. Your end goal is to have a financial filing system that you leverage year-round, not just at tax time.

#4 Thinking about your tax preparer options

How was filing your taxes last year? Were you trying to cut costs by using a DIY preparer (like TurboTax)? Was your situation pretty simple but you handed it off to a professional accountant? Instead of relying on what you did last year, especially if it wasn’t the best option, think about your options ahead of time.

If you just have W-2 income and you don’t have many deductions, do you really need a CPA? Maybe you took on extra side hustles and things got more complex than ever before, do you really want to spend extra hours figuring things out with TurboTax? My point is to give yourself some time to think about your tax preparer options so you can truly find the best one for you and your current situation.

#5 Contributing to tax-free benefits

Have you been meaning to add funds to your H.S.A or F.S.A? What about your pre-tax commuter benefits? If there are any pre-tax or tax-free benefits you’ve been planning to take advantage of, make sure to get it done before the year ends. All of these benefits will help reduce your taxable income for the year. I already touched on IRA contributions, but that’s another benefit to take advantage of.

Related: 5 Ways to Prepare for Tax Time

If you can start incorporating some of these winter money habits into your holiday season routine, tax time will be a breeze! Are there any habits you have to get you prepped for tax time? Have you tried any of the tips above? Drop a comment to share!

-Raya
The CGS Team
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