In your life, you can be certain of two things: death and taxes. One of them is unavoidable in its entirety, and one of them could cost you dearly if you try to avoid it. Taxes must be paid by everyone, and yet there are tax minimization strategies out there that will help you to save, invest, and build wealth. However, working and raising a family means that you have to be more careful with your money, and sometimes, that can mean paying more money on your taxes and building wealth that way.
There are plenty of reasons that you should consider overpaying on your taxes, and companies like Timberline Financial can help to talk you through how to avoid tax debt while you try to build wealth. Building your savings is important, and paying your taxes even more so. If you want to truly do well for yourself, though, consider what it could mean for you to overpay your taxes this year. Let’s take a look at 4 reasons you should consider!
1) Job Security
When you choose to overpay your taxes, this can help you if you were ever to lose your job. Not only will you be ahead on what you owe on taxes, but you can also avoid any huge costs as a result. The money you overpay into your tax account will help to cover you if there is ever a problem with paying your taxes in the first place. But don’t forget to have a solid financial plan in place too!
Your children are going to grow up faster than you think, and when you overpay on your taxes, you can ensure that you are able to pay more money into their college funds. In fact, you can stop contributions to your 401K, tap the employer dividends from your retirement and expose the leftover money to ordinary income rates. This will help you to avoid that 10% penalty on an early withdrawal. You can use 529 plan money to cover school tuition without the bite of the taxes that tend to go along with it. If you want to afford good schools for your children, this is a good way to go about it.
3) You Can Pay More Now
If you overpay into your tax account, you will be hit with a much smaller tax bill at the end of the financial year. You want to ensure that you aren’t waiting on an entire year’s worth of taxes to be billed to you – or you could find yourself in trouble trying to afford it. If you consider paying a little more now, you can pay less later on and it’ll help you out!
4) Avoiding a Huge Bill
You want to know that your taxes are paid on time and if you worry about losing your income, you will find yourself in receipt of a much larger bill than usual. Taking the time to add a little more each month to your tax account allows you to profit early on, and it will help you to see whether there are any tax rebates coming your way!