3. Revisit your tax plan
Many people think about their taxes only as we get closer to tax season, but this should be something you are thinking about all year long. Proactively planning your taxes can help you maximize your savings and minimize your liability. The more you think about it, the better plan you can have in place when Tax Day arrives.
The first thing I recommend doing in a mid-year checkup is double check your withholdings. Income tax brackets have changed over the last few years, and many people haven’t updated their withholdings to reflect that. By adjusting your withholding, you are benefiting your finances year-round. You may not get as big of a tax refund, but you will get more money in each paycheck.
What type of retirement accounts are you contributing to? Tax-deferred accounts like your 401(k) and traditional IRA offer tax advantages now. You won’t pay taxes on these accounts until you withdraw money in retirement. On the other hand, tax-deferred accounts like Roth IRAs offer tax advantages later in life. Your money is taxed up front, so you withdraw it tax-free in retirement. If you’re not careful, taxes can sneak up on you, and you don’t want to get caught paying more than you need to.
Many people focus on their finances at the beginning of the year but fail to keep them at the forefront of their mind for the remainder of the year. Set aside time this month to review your finances, either by yourself or working with a financial adviser. With more than a quarter of the year left, there is still plenty of time to make any necessary changes before 2023 comes to an end.