Tax Day Resolutions

New Year’s resolutions on average last about 1.5 weeks based on my own personal survey.   Perhaps people don’t know how to set and effectively achieve goals. Or maybe they need more than a drinking binge to bring about effective change in their lives.

So how did your tax preparations go this year? Did you spend hours and hours and hours searching for documents, trying to remember where the charitable donations file was, or calling your broker to see if you already contributed to an IRA?

Did you hire someone and pay them an outrageous amount of money to save you time, pain, and suffering? Did they charge you extra for the time they spent researching your situation, calculating the cost basis of the stocks your brother-in-law told you to buy 9-months ago that did nothing but lose money?

If you’re going to improve your financial life and finally get organized, I’d rather you set new annual goals on tax day than on new year’s day. Below are some ideas for how to make next year a much better year financially:

• start your 2009 (tax year) file today. Include any receipts for things like tax preparation or tax software that you can deduct the next time you file your taxes.
• if you used tax prep software, consider running it with your assumed 2009 numbers (instead of your 2008 numbers). If you’re going to have any major life changes (kids, marriage, divorce, new job, more/less donations, etc) it will give you and idea if your withholding are correct.
• don’t just focus on reducing taxes. Focus both on earnings and taxes to maximize your after-tax results.
• Identify at least one mistake you made this year that could have been avoided. Did you sell any securities right before the 1-year mark? Are you in a high income bracket and have taxable rather than tax-exempt money market funds? Did you make a big donation at the beginning of 2008 that could have been made in 2007 (thus giving you a tax break one year earlier)?
• Adjust your withholdings if you owed a large amount of money or are getting a large refund. This is a fairly easy thing to adjust and get right.

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