It’s already June, and tax time seems like just yesterday. Just as the last few months have flown by, tax time will again be here before we know it.

Though it’s the middle of the year, here are three things you can do now to potentially save a significant amount on your taxes at the end of the year.

#1: Stay on Top of Your Estimated Payments

Are you making estimated payments quarterly? If you have income coming in where federal taxes are not withheld, you have the option of making estimated tax payments quarterly so as to avoid a large lump sum all at once. This type of income can be self-employment, rental income, interest income, alimony, or gains from a stock or other asset.

However, if you officially opt to pay quarterly taxes be sure to pay on time. There are penalties for paying late. Paying the proper increments and paying on time could save you a lot during tax season.

#2: Review Your W-4 Form

Not everyone knows you can change the options on your W-4 form, the form that tells your employer how much federal tax to take out of your paycheck. If you choose many allowances, you get more take-home pay but end up paying more taxes at the end of the year. Make sure you’re not taking TOO many allowances, however, as you could get a penalty for tax underpayment at the end of the year. Depending on your financial situation, it’s better to err on the side of having fewer allowances, and potentially getting a tax refund with some of that amount anyway.

#3: Double Check Your Retirement Contributions and Withdrawals

If you’re not already on a plan contributing to your retirement, it might be a good thing to consider. Many plans are tax deductable, so any money you put in is not only money you save, but also money you may not have to pay taxes on this year (depending on your retirement plan.)

On the flip side, if you’re already making contributions to a retirement account, and you’re over 70 ½ (or retiring this year anytime past that age), you are required to withdraw certain amounts each year to avoid a penalty. This withdrawal is called a “required minimum distribution” or RMD. It’s easy to avoid penalties by withdrawing on time, but different rules apply to different situations so be sure you know ahead of time what is required of you.

Want Other Midyear Ideas to Save on Taxes?

Everyone’s tax situation is different, and there may be significant tax savings hidden in plain sight. PDM’s tax experts can help advise you on the best course of action. Contact us; with our years of technical experience, advanced training, and cutting edge technology, we are your financial partner.