Consider Doing Your Taxes Now
December 14, 2008 – 11:05 am
This post is for the overachievers in the group, or those of you who are trying to upgrade to overachiever status. 
I’d like you to consider competing a draft version of your 2009 tax filing now. Yes now. In 2008. I know, it’s “crazy talk” to start your taxes before April 1st for most people, but getting a head start has the potential to provide a variety of benefits, including:
- it gives you the opportunity to figure out any investments gains and losses at a time when you can still do some tax planning and offset some of those losses with gains, etc.
- perhaps you’re going to be near a financial cutoff, like if you earned a bit more than $156,000 (married filing jointly for 2008) and already contributed to a Roth IRA. By doing a rough cut of your taxes early you can still find a way to squeak under the limit. Maybe you can move up a charitable donation or so something else that will legally reduce your adjusted gross income. You could increase your 401k contribution to reduce your income on your last couple paychecks of the year. Otherwise you’ll be forced to recharacterize all or part of your contribution, which is probably not fun.
- figure out if you’re going to owe taxes or if a refund is coming your way. This will help you develop next year’s budget, and will show you if your tax withholding’s are correct.
- figure out how much you’ve contributed to your IRA’s and 401k’s, and adjust the contributions accordingly if possible. 401k contributions can only be make up to Dec 31 of the year in question, but individual IRA and Roth IRA contributions can be made up until April 15th of the following year (2009 in this case).
- if you start early you’ll experience less stress, and will be more informed about your current financial situation
- it will help with goal setting
It may seem like a lot of work, but it’s work you’re going to have to do any way. By starting now you can take advantage of your “overachiever” status and still affect the outcome! Is anyone out there willing to commit?
Image Credit: Paul Keleher
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3 Responses to “Consider Doing Your Taxes Now”
I guess I’m an “overachiever”. I haven’t actually filled out the forms, but I always keep a spreadsheet with all the tax fields and calculations, so I know at any time what our refund (or what we owe) will be. I can see how my IRA contributions affect our tax, and if I should contribute more for more tax savings, etc.
By Corrie @ "Cents"able Momma on Dec 14, 2008
Good advice! I’ve already done a preliminary run of my taxes. I’m planning on taking some extra time off work for Christmas so I’ll get Turbo Tax started in a week or so
. Might have to wait until I get all the W-2s, 1099s, etc to actually file, but I’ll be ready and waiting when they get here.
By Justin "The Night Trader" on Dec 14, 2008
Very proactive, sadly I work in the corporate world and I can only figure my taxes based on my annual salary (which varies based on commission, bonuses etc). I do have an idea though as to what my tax obligation will be.
By andy on Dec 21, 2008