These May tax moves could make you very merry
Monday, May 01, 2017
Welcome to the merry, merry month of May, which is particularly joyous for folks who've finished up their 2016 tax returns.
That's almost 136 million of us, with around 17 million of those 1040 forms arriving at Internal Revenue Service processing centers in the final days of this year's main filing season.
While the 2017 filing season got off to a slow start, the IRS says by the time it wrapped up on April 18, this year's figures ended up being about the same as those in 2016.
But that doesn't mean that it should be a lazy May for folks who filed. There are still plenty of tax moves you can make this month. Here are some key ones.
Pay yourself, not the tax man: Let's start with an easy one. Adjust your withholding. You'll want to do this by submitting a new W-4 to your payroll office regardless of whether you got a big tax refund this year or ended up owing Uncle Sam some money.
Ideally, you want to pay in through withholding (and estimated taxes for some of us) as close to your eventual bill as possible. That will mean you will have your money in your hands throughout the year, instead of having to wait for the U.S. Treasury to cut you a check or directly deposit the money.
For some folks this filing season, the wait was longer — and it will be that way in the future, too — thanks to a new law mandating the IRS take extra time before issuing refunds based on Earned Income Tax Credit or Additional Child Tax Credit claims. If you claim these credits, no matter how early you file the IRS can't issue your refund before Feb. 15.
So don't get stuck needing but not having access to your tax money next filing season. Adjust you payroll withholding now.
And if you're afraid you'll just spend the extra paycheck cash, set up a savings account and have the amount that was going to overpaid taxes deposited instead straight into your own savings where you can get whenever you need it.
Or if you have a 401(k) plan at work, when you adjust your withholding, also change your contribution amount to your workplace retirement plan. Shift the money that was going to the federal government in taxes to your personal nest egg. And those retirement plan contributions might help you claim the Saver's Credit next year.
File ASAP: If you got an extension to file your 2016 return, this is a good month to take care of that. Just because you have until Oct. 16 (yes, it's a day late this year since the 15th is on Sunday) doesn't mean you have to keep procrastinating. The sooner you get this tax task off your plate, the more time you'll have to do other, probably more fun, things.
Be sure to check into using Free File. It's open for folks with adjusted gross incomes of $64,000 or less through the October extension deadline.
And if you totally missed the April 18 filing deadline, then file your now-delinquent 2016 tax return ASAP! This is the only way to stop the accruing of costly penalties and interest.
Make plans for kids' camp: School will be ending this month across much of the United States. That means parents are scrambling to get their youngsters enrolled in day camps to fill up the coming summer days.
While the Internal Revenue Service can't help you find the perfect camp for your kiddos, it can help cover some of the costs. Day camp expenses can be used to claim the child and dependent care tax credit.
Note, however, that overnight, sleep-away camps don't count here, so if the tax break is important to your camp decision, that requirement should help narrow your search.
More May tax moves: These are just a few May Tax Moves to make. You can find more in the feature of the same name over in the ol' blog's right column.
Just scroll down a bit and look for the red lettering under the countdown clock ticking off the remaining filing extension days and hours.
I know it's a busy month, what with transitioning from spring to full-blown summer and all the end-of-school and family vacation plans to be made. But try to take care of some tax tasks this May, too.
When you file your 2017 tax return next year, the savings from this May's moves could make you very, very merry then, too.
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