By This is the time of year at Family Financial Partners when our phones ring all day long with calls from clients asking questions about their taxes. As important as investments are, getting your taxes organized and filed wisely and correctly is just as crucial to your overall financial health.
At FFP, we take a bulk of that work off of our clients, prepping and sending documents directly to them and their CPA. We take a very coordinated approach to this — we don’t want the client to have to be the middleman. It’s simple for me to jump on a conference call with a CPA and make sure everybody’s on the same page and we have an open line of communication.
With that said, whether you file on your own or with a CPA, this can be an overwhelming experience, and I wanted to pass along five tips that should help ease the burden of the tax season.
1. Gather all your records in one place.
The very first step to take is to make sure you have all the necessary documents and financial records. This includes W-2 forms, 1099 forms, mortgage statements, student loan 1098s, receipts, and any other relevant documentation. You might think you’ll remember that one missing document later — but it’s easy to get disorganized that way.
2. Maximize your retirement contributions.
This is probably the number one question I get: Am I contributing enough? Raising your contributions within your 401(k) can help lower your taxable income and increase your retirement savings. It’s also a good idea to consider funding an IRA or Roth IRA, especially now that the contribution limit has gone up in 2024 to $7,000 for people under 50. Note: April 15 is the deadline to fund your IRA or Roth IRA to count toward the previous year’s contribution. Your Roth IRA contribution may be limited based on your filing status and income.
3. Consider charitable donations.
In addition to being a generous thing to do, making charitable donations is a great way to potentially lower your tax bill. Just make sure to keep detailed records of your donations to ensure you receive the appropriate tax deductions.
4. Consult with a tax professional.
Tax preparation software has gotten better over the years, but it’s always a good idea to consult with a tax professional to be sure that you’re taking advantage of all available deductions and credits while avoiding costly mistakes. If you don’t know where to look for a reputable CPA, FFP has a whole list of folks we can recommend, even on short notice. Just get in touch with us, and we can help point you in the right direction.
5. Make good use of your refund.
If you’re getting a refund this year, consider how it could best serve you. Fill up that emergency fund or pay off that lingering debt. If you don’t have a savings plan like an IRA or a college fund for your young one, maybe start one. Or even pay for that vacation you’ve needed so desperately. Financial health and mental health go hand in hand.
No matter what your biggest needs are this tax season, we can help you make a plan. Reach out today and let us answer any questions you might have.
Tax and/or legal advice is not offered by Family Financial Partners. Please consult with your tax professional for additional guidance regarding tax-related matters.
Article by Jacob Buckley, CFDA, MBA, Wealth Advisor at Family Financial Partners — a financial services firm in Lexington, Kentucky.
