Tax season might seem far off, but waiting until April to think about your taxes can lead to costly surprises. The middle of the year is the perfect time to pause, review your finances, and make smart tax moves that can minimize your liability and maximize your refund next spring. Here are five savvy steps you can take now for a smoother tax season ahead.
- Reassess Your Withholding
If you received a large tax bill or refund last year, it’s time to revisit your Form W-4. Too little withholding could mean a hefty tax bill, while too much means giving the IRS an interest-free loan.
Action Step: Use the IRS Tax Withholding Estimator to see if adjustments are needed. Submit a new W-4 to your employer if your life situation has changed — such as marriage, divorce, or having a child.
- Track Estimated Tax Payments
Freelancers, business owners, or those with side income need to pay quarterly estimated taxes. Missing these can result in underpayment penalties — even if you pay the full amount by April.
Action Step: Review your income so far and project the rest of the year. Make estimated payments by the quarterly deadlines (September 15 and January 15 are still ahead for this tax year).
- Maximize Retirement Contributions
Contributions to retirement accounts like a 401(k) or Traditional IRA not only build your future nest egg but also reduce your taxable income. Mid-year is a great time to check your progress toward contribution limits.
2025 Limits:
- 401(k): $23,000 (plus $7,500 catch-up if over 50)
- IRA: $7,000 (plus $1,000 catch-up if over 50)
Action Step: Increase your contributions through payroll deductions or direct contributions if you can. Even a small increase now can make a difference by year-end.
- Evaluate Your Tax Deductions & Credits
Now is a good time to start organizing receipts and identifying potential deductions or credits — such as charitable contributions, education expenses, or health savings account (HSA) contributions.
Action Step: Keep a digital or physical folder of deductible expenses. If you’re close to itemizing, plan strategic giving or deductible expenses before the year ends.
- Consult a Tax Professional
Waiting until April to meet with a tax expert is like asking for directions at the finish line. A mid-year consultation can help you implement strategies while you still have time to act.
Action Step: Schedule a mid-year review with a tax advisor to catch any red flags, uncover savings opportunities, and get clarity on your unique tax situation.
Bonus Tip: Review Your Business Finances
If you’re a small business owner or self-employed, mid-year is crucial. Revisit your income, expenses, mileage logs, and business deductions now. Also consider whether an S-Corp election or LLC setup might reduce your tax burden for the year.
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