Tax time has come to a close for this year, and most people want nothing to do with the subject until much later in the year or nearer tax time next year. While many Massachusetts residents can empathize with that sentiment, it may not be the best course of action for dealing with the IRS. In fact, there may be some steps to take now that could make tax time go more smoothly next year.
For instance, now would be a good time to starting paying into a 401(k) or an independent retirement account, or IRA. Participants avoid taxes on the funds in these accounts until the money is taken out of them. Moreover, contributions to a 401(k) come out prior to earnings being taxed. In addition to avoiding taxes on these amounts, Massachusetts residents are building funds for retirement. It could be seen as a “win-win” situation for many people.
Making charitable contributions throughout the year instead of at the end of the year could also save some time and money as well. One of the most important things anyone can do to avoid scrambling at the last minute is to remain organized throughout the year. Keep receipts, paperwork and other tax-relevant items together in a usable fashion.
No one likes to thinking about dealing with the IRS unless he or she has to for some reason. However, taking these and other proactive steps beginning now could help avoid unnecessary dealings with the agency at and beyond tax time. Asking questions now when there is time to spend gaining a complete understanding of what will work best in a particular situation also alleviates the bulk of the stress ordinarily associated with filing tax returns.