TULSA, Okla. — Tax season may be months away, but experts say the middle of the year is one of the best times to take stock of your finances and make moves that could lower your tax bill or increase your refund.
"You have a lot more control over your tax income than you might think, but it does require some action on your part as a taxpayer," tax expert Mark Steber said.
Steber recommends starting with a mid-year tax projection — a simple calculation that does not require a spreadsheet or a professional.
"Taking half a year's worth of stuff, and simply multiplying it by two, and seeing where you get. And if you have questions, see a pro. If it looks like it's supposed to, monitor and manage it," Steber said.
If that projection shows you may owe money at tax time, one of the easiest fixes is adjusting your withholding.
"For most companies, you can do that either on your computer or on your smartphone now, and increase your tax withholding. Now, that'll reduce your paycheck a little bit, but it's better $25 every paycheck than owing a bunch of money back in the end of tax season," Steber said.
The reverse is also true. If your projection shows a large refund coming, you may want to lower your withholding and put more money in your pocket throughout the year.
Retirement contributions and side hustle deductions
Contributing more to your company's 401(k) is another way to reduce your taxable income. Steber said if you are not contributing at least enough to capture your employer's match, you are leaving money on the table.
For those with a side hustle or self-employment income, tracking expenses closely can pay off. Deductions for mileage, a home office, and business gifts are often overlooked.
"Keeping better track of deductions is really important, because if you leave something off, you're just gonna pay more taxes," Steber said.
Self-employed workers can also set up a retirement plan through a bank to take advantage of tax benefits on that income.
New deductions and life changes to watch
Steber said taxpayers should also pay attention to a new rule this year that allows a charitable donation deduction without the need to itemize.
"Even if you don't itemize, you might be looking at a new deduction," Steber said.
Tips and overtime pay also carry a deduction this year. Steber said year two of that rule should help clear up some confusion taxpayers had in its first year.
Major life changes — getting married, having a child, moving, changing jobs, or having a household member pursue higher education — can all have a significant impact on your return and should be tracked throughout the year.
The cost of doing nothing
Steber said one of the most important things taxpayers need to understand is that the government will not correct a missed deduction for you.
"If you're due more money because of the earned income credit, a dependent care credit, or some deduction you didn't take, the IRS, and most states, don't just simply increase your refund and send you more money. You leave it off, it stays off," Steber said.
He recommends spending about an hour a month organizing tax records, tracking life changes, and reviewing deductions.
Tulsa resident Brian Billings said he and his wife track their finances year-round using an online accounting program.
"We're both retired now, so our income is fairly stable," Billings said. "We do keep our finances in an online accounting program so that keeps us on track."
Steber said taxpayers who want help do not need to wait until filing season to consult a professional.
"Even if you do it yourself, they love talking about taxes," Steber said. "They can help increase your accuracy, lower your stress, and get you more money."
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