Money Moves to Make Before April 15
Joy Wallet is advertiser-supported: we may earn compensation from the products and offers mentioned in this article. However, any expressed opinions are our own and aren't influenced by compensation. To read our full disclosure, click here.
Each year, there is a day that individual income tax returns are due in the United States. To avoid being charged, submitting (otherwise known as filing) your taxes on or before that date is important. In some cases, you may be able to request an extension so you can submit your taxes after the due date. In 2024, tax day falls on Monday, April 15th.
So…..are you ready for it? Here’s what you need to know about managing your money before tax day.
In this article
Make $500+ Your First Month With KashKick!
- Transparent information on each offer for earnings and tasks.
- Money is deposited quickly and securely
- Featured offers maximize earnings
- First-class referral program
What to do with your money before tax day
When you file your taxes, you’ll learn that you either owe money to the federal government or receive money back from the federal government.
If you owe money
If you anticipate that you’ll owe money, it’s important to consider that leading up to tax day. You’ll want to ensure you have enough money saved to pay what you owe to the IRS. There are several reasons why you might owe money this year, even if you’ve received refunds after filing your tax return in the past.
Change in withholding allowance
When you start a new job, one of the pieces of paperwork that you’re asked to fill out is a Form W-4. This form is what employers use to determine how much to withhold from your paychecks for federal and state income tax.
By filling out this form, you are claiming tax withholding allowances. The more allowances you claim, the less income tax will be withheld from your paychecks. While this means you receive more money from your paycheck, it could also mean you’ll owe money when tax day rolls around.
Changes in your filing status
How you file your taxes can affect key factors such as your tax bracket and the credits and deductions you can take. Major life events like marriage or divorce can change your filing status. Having a child or another dependent can also change your filing status.
Related: Key Personal Finance Dates for 2024
Certain types of jobs
Generally speaking, if you’re a freelance or contract worker, you probably aren’t having income tax withheld from your paychecks. This means that you'll likely owe money when tax season rolls around since you haven’t contributed to income tax throughout the year.
It’s also important to remember this if you work a freelance or contract job on the side of your full-time job or another job where your employer withholds money for taxes. Even though you may be having taxes withheld from your regular paychecks, the fact that you have other untaxed income means that your refund could be reduced, or you could still owe even though you were having some income withheld.
If you receive a refund
Do you plan to receive a refund this year? That’s great! Tax refunds are a great opportunity to start making money moves, and you can begin planning for them right now. You may want to consider one or more options to maximize your tax refund money.
Set a financial goal
Is there something you’ve wanted to buy for a while? Then this is a great opportunity to get your nest egg started. Whether you’re saving up for a wedding, a down payment on a house, a new computer, or something else, tax refunds are a great way to turn those dreams into a reality.
When saving for big purchases such as a house or wedding, having a specific account or other location for only that money can be helpful. Setting the money aside in a dedicated account or a safe place in your home can help you track how much you have saved toward that goal.
Pay off debts
You can also use some or all of your tax refund to pay up debts. This could be your credit card debt or student loan debt. You could even make additional payments toward your car or home loan to get those paid off quicker.
There are several methods you can use to pay off debt. Some like to use the snowball method, where you pay off your smallest debts first and work up to the larger ones. You could also pay off debts based on which ones have the highest interest rates or which ones are more important to you to pay off quicker.
Invest
Do you have a retirement account set up? If not, it’s something that you may want to consider starting now, even if retirement is still decades away. If you have an employer, you may want to ask them if they offer a 401(k) and if they will match your contributions into the account. You could also , such as a Roth IRA.
If getting involved in the stock market has been on your to-do list for a while, consider the months leading up to April 15th as your time to study the market. Then when you receive your refund, you can use it to fund your brokerage account and start trading.
Make $500+ Your First Month With KashKick!
- Transparent information on each offer for earnings and tasks.
- Money is deposited quickly and securely
- Featured offers maximize earnings
- First-class referral program
Tax filing services
Filing your taxes can seem overwhelming for some, but it’s really fairly simple. It could even be free for you to file depending on your tax situation!
DIY tax preparation software
Several companies can handle your taxes online on your own. When considering this option, it’s important to think carefully about your tax situation. Each company handles tax filing in its own way. Some companies offer free filing for both federal and state tax returns. Others may offer free filing for federal only, with an additional charge for filing your state taxes. Then you might find companies that offer different prices depending on your tax situation.
Another factor to consider when picking a DIY tax software is whether it supports the tax forms and deductions you plan to use. Most companies have a list of supported tax information listed on their websites.
Some companies to consider are:
- IRS Free File
- H&R Block
- Jackson Hewitt
- Cash App Taxes
Tax Professionals
You can also hire a professional to file your tax return for you. Tax professionals can include certified public accountants (CPA), enrolled agents, or tax lawyers.
When you hire a tax professional, you will hand over your personal information and tax forms to the tax preparer, so it’s important that you trust the person that you hire. The tax preparer will most likely ask you some standard questions, and they may have additional questions as they work on filing your taxes. The tax preparer should let you review your tax return before it is filed to ensure that there are no errors regarding your personal information.
What’s the best way to file my taxes?
While it can be tempting to save money by filing your tax return yourself, there are some situations where hiring a professional to do it for you can be the better option. If your taxes are relatively simple, you can probably file your return online quickly and easily. A tax professional may be the better option if you have a complicated tax situation, such as owning a business or having significant assets or investments. It can also be helpful if you’re planning to itemize your deductions.
Costs of financial planning
Before you file your tax return, having a plan is crucial. If you can come up with a plan yourself, that’s great! But there are still some costs to consider when it comes to handling your money before tax season yourself:
- Planning to use your tax return money to save up for a major purchase? Then it’s important to consider your bank account's minimum balance and maintenance fees.
- If you plan to invest your money in the stock market, consider the brokerage fees, minimum balances, and how much money you’re willing to risk.
- If you owe money, make sure you have a payment plan.
- Whether you plan to use a DIY tax prep software or hire a tax preparer, make sure you understand the costs of filing your taxes before making your decision. If you use an online DIY tax preparation software and need assistance, there may also be an additional fee to get that help.
Pros and cons of planning for tax season
Pros
- Reduced stress. By planning ahead, you avoid the last-minute rush and stress associated with gathering documents and information at the eleventh hour.
- Better accuracy. With more time to review your tax documents, you're less likely to make errors. This accuracy can save you from penalties or the need to file an amended return.
- Opportunity for tax savings. Early planning allows you to explore various tax-saving strategies, such as making charitable contributions, contributing to retirement accounts, or timing income and expenses.
- Professional assistance. If you need the help of a tax professional, planning ahead ensures that you can find and work with someone before they get too busy closer to the tax deadlines.
- Improved financial planning. Understanding your tax situation early can help in better overall financial planning, including budgeting and investment decisions.
- Avoiding penalties and interest. Filing your taxes on time helps avoid late filing penalties and interest charges.
Cons
- Time and effort. Planning ahead requires time and effort, which might feel burdensome, especially if you have a complex financial situation.
- Cost. If you require professional assistance, doing so earlier might be more expensive than last-minute services.
- Changing tax laws. Tax laws can change, and early planning might need adjustments if new laws or regulations are passed after you've started your tax preparation.
- Premature decisions. Early planning may lead to making certain financial decisions, such as selling assets or making contributions, that might not align with your changing circumstances closer to the tax deadline.
- Information updates. You may need to update or revise your tax return if you receive new or corrected information (like revised 1099s or W-2s) after you've already prepared your taxes.
Make $500+ Your First Month With KashKick!
- Transparent information on each offer for earnings and tasks.
- Money is deposited quickly and securely
- Featured offers maximize earnings
- First-class referral program
The bottom line
While tax season can be a headache for some, it’s much easier if you know how to plan for it. The financial decisions you make throughout the year can greatly impact your tax return for the following year. Having a plan for your money gives you a better idea of what to expect.
Filing your taxes can be a great opportunity to get on the right path for the next year. If you owe money, you can figure out why and either changes your withholding status or understand how to save up to pay your taxes throughout the year. If you get a refund from your tax return, you may want to consider changing your withholding status so that you don’t have as much taken from your paychecks. Or, you can use the refund as an opportunity to make larger payments that you wouldn’t be able to otherwise!
As with most financial decisions, what you decide to do before tax season depends entirely on your financial situation and goals. The best thing you can do, no matter your situation, is to be prepared.
Joy Wallet is an independent publisher and comparison service, not an investment advisor, financial advisor, loan broker, insurance producer, or insurance broker. Its articles, interactive tools and other content are provided to you for free, as self-help tools and for informational purposes only. They are not intended to provide investment advice. Joy Wallet does not and cannot guarantee the accuracy or applicability of any information in regard to your individual circumstances. We encourage you to seek personalized advice from qualified professionals regarding specific investment issues. Featured estimates are based on past market performance, and past performance is not a guarantee of future performance.
Our site doesn’t feature every company or financial product available on the market. We are compensated by our partners, which may influence which products we review and write about (and where those products appear on our site), but it in no way affects our recommendations or advice. Our editorials are grounded on independent research. Our partners cannot pay us to guarantee favorable reviews of their products or services.
We value your privacy. We work with trusted partners to provide relevant advertising based on information about your use of Joy Wallet’s and third-party websites and applications. This includes, but is not limited to, sharing information about your web browsing activities with Meta (Facebook) and Google. All of the web browsing information that is shared is anonymized. To learn more, click on our Privacy Policy link.
Images appearing across JoyWallet are courtesy of shutterstock.com.
Writer
Ashley Hart is a lead copywriter and digital marketing expert covering finance, law, real estate, music, entertainment, health and wellness.
Share this article
