The December holidays are a time for relaxation and celebration, but they’re also a smart time to start planning for the upcoming tax season. By taking a few proactive steps now, you can avoid last-minute stress and even save money when it comes time to file.
Here are a few ways to make tax planning part of your year-end review:
1. Organise Your Documents Early
Start by collecting all your income records, receipts, and any other relevant documents, especially if you’re self-employed or own a business. December is a good time to begin organising everything in one place—whether in a digital folder or a physical file—so you’re prepared to file without missing important details.
2. Review Deductions You Might Qualify For
Certain expenses are deductible, which means they can reduce your taxable income. Medical expenses not covered by your medical aid, donations to public benefit organisations (PBOs), and retirement annuity contributions are examples of potential deductions. Taking the time now to understand what you qualify for can help you maximize your refund or minimize what you owe.
3. Make Smart Year-End Contributions
If you’re looking to bolster your tax return, consider making additional contributions to your retirement fund or donating to approved charities before the year ends. Not only will these contributions support worthy causes and secure your future, but they’ll also reduce your taxable income, which could benefit you at tax time.
4. Review Your Business and Investment Income
If you have rental properties, business income, or investments, take a look at any income or expenses related to them. Capital gains from investments, for instance, can be subject to tax, and knowing your position now could help you plan better for the year ahead. You may want to consult with a tax professional on how to handle these areas, especially if you’ve had a particularly successful year.
5. Schedule a Consultation with Your Tax Advisor
If you’re uncertain about your tax status or have a complicated tax situation, the holiday break can be an ideal time to schedule a meeting with a tax advisor. They can give you advice on your unique tax position and suggest ways to structure your finances for tax efficiency, even as you plan for next year.
Final Thoughts
While tax planning may not seem like the most festive activity, the December holidays offer a good opportunity to get ahead on your finances. Just a few small steps now can lead to significant savings and less stress down the line.
If you take the time to get organized and make strategic moves, you can enter the new year with peace of mind, knowing you’re prepared to handle your taxes effectively. And once you’re done, you can get back to enjoying a worry-free holiday season!
