What is Your Tax Strategy?

Will you get a tax bill or a tax refund on April 15th? If you were employed in 2013 and you did not have sufficient tax withholdings, you will get a tax bill come April 15th. If you have over-withheld then you will get what a lot of Americans look for, a 4 digit refund. That 4 digit refund is your hard earned money that you earned during the preceding year but did not get in your regular paycheck because you asked the government to hold too much of your money.

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Odds are you could have used that excess money to pay down monthly bills during 2013. If you get $2,000.00, yes you could paydown that holiday credit card bill, but in the alternative you could have had that money in your paycheck in October, November and December and purchased your holiday gifts with cash. Of course, if you got through those months on a shoe-string then you know those extra dollars in your paycheck (if you had one) could have stretched your budget that much farther.

If you are consistently, year after year, getting a 4 digit refund, I challenge you to think about taking a look at your W4-withholdings. Have you claimed all of your dependents (if you claim your dependents), have you adjusted your marital status since your divorce? Do you file your taxes claiming standard deductions or itemized deductions? If you have significant deductions year after year, for example, mortgage interest deductions, dependent childcare deductions, charitable deductions, student loan interest deductions and various child credits, you really might want to consider your options. Remember, you do have options. Happy tax season!