Optimizing your tax situation requires proactive planning and a keen understanding of the ever-evolving tax landscape. There’s also the question of the rising and falling interest rates. If you aren’t roughly aware of the events that can trigger shifts in your own tax situation—and the ways you can boost your savings—you might be missing out on a few helpful perks when it’s time to file!
Getting Proactive About Managing Your Savings
Some parts of tax preparation will always be out of our control. We have to follow the tax code, and we obviously can’t make up our own rules. That being said, though, there are a handful of ways to positively influence our savings strategy and keep making the most of our money.
For example, with the Federal Reserve’s recent interest rate increase, some taxpayers are exploring their options with municipal bonds and bank CDs. Higher interest rates can be great news for tax-advantage bonds, especially when bonds within your home state are exempt from state taxes.
U.S. Treasury Securities provide another option. In general, these aren’t subject to state or local tax, which can help you get a great bang for your buck. There are savings alternatives at rates of up to 4% and even 5%. It’s just a matter of reviewing the possibilities and then running the numbers. The after-tax calculations can help assess the true value of your return, as well as any of the risks.
Be Aware of Potential Shifts in Your Tax Situation
As you plan to save more, it’s also critical to consider the ways in which your tax situation may have changed—and what you might need to do to prepare for a higher tax liability.
One key factor that can significantly impact your taxes is a change in employment status. Whether you've switched jobs, become self-employed, or experienced a shift from full-time to part-time work, these transitions can alter your income, deductions, and tax liabilities. These changes can also lead to a shift in residency. So if you’re gearing up for a move, keep in mind that the new region could have you experiencing different tax rates and regulations too.
Additionally, changes in marital status, such as marriage, divorce, or the birth of a child, can also have significant implications on your tax situation. It's important to stay proactive and adjust your tax planning strategies accordingly to ensure compliance and minimize any unexpected financial burdens.
Another aspect to consider is changes in homeownership. Buying or selling a property, refinancing a mortgage, or investing in real estate can all influence your tax situation. Keeping track of these transactions and understanding the tax implications can help you optimize your tax planning and take advantage of any available deductions or credits. There are a lot of moving parts. But when you can collaborate with an experienced tax professional, you can feel good knowing that you’re being as strategic as possible.
Make the Right Move—We Can Help!
NSO & Company partners with individuals, families, and small business owners all throughout Central Indiana for their tax planning and tax preparation needs. Every situation is unique. Let us help you understand your risks and possibilities for growth! We’re always happy to connect with new clients. Just send us a message so we can start the conversation!
