Two tips to take the sting out of paying Uncle Sam next year
by Apr 3rd 2009 8:00AM
For many Americans, even with all the economic stress these days, tax time is a season of joy because it means tax returns will soon start showing up in their checking accounts. Whether the money is going to a vacation, sauna, new car or mortgage payments, these lucky souls are feeling pretty good right now.I used to be one of those people, eagerly plotting out my tax time purchases like a 10-year-old with a Christmas list. But no longer. This year it is I who owe Uncle Sam a good chunk of money. While I can't do anything to negate this problem for 2008, there are a few simple things to do while taxes are fresh on your mind to take the pain out of taxes in come April 2010
The majority of the money I owe is to the federal government due to my work at WalletPop and the fact that my wife switched jobs last year. These changes in our income meant that our federal withholding was incredibly low. Rather than get hammered by a big bill next April I called up my payroll department and increased my withholding to match what I am owe this year. The best part of doing that right now is that with the recent payroll Make Work Pay tax credit, the difference will be less noticeable.
Another easy way to cut down on the pain of paying a big tax bill is to make sure you are getting credit for everything you should. I found several areas that I could have deducted; expenses and charitable gifts, had I kept better records throughout the year. If you need a better way to track your receipts and tag them to specific expense categories, NeatDesk, will help you maximize your bookkeeping without taking all your time. Another cool tool for tracking expenses is online finance tool Wesabe, which you can use to quickly pull up past expenses based on specific tags. Whichever tool you use, it will be harder to leave money on the table next year.
If you're one of the "smart" people like me who have taken an interest free loan from the government rather than giving it; how do you deal with the inevitable tax time payout?We'd love to hear your stories.
If you need a break from number crunching, be sure to take WalletPop's Tax Pulse quiz.
