Tax planning might be the last thing on your mind with the arrival of the holiday season. However, taxes and holiday spending are often linked in surprising ways. The holidays also come at the end of the year, so it's especially important to get your finances together around this time. To get ready for tax season, follow these simple tips now.

How to Manage Your Taxes During the Holidays

1. Tweak Your Withholding Allowances

Withholding allowances affect the amount you receive from your tax refund. As a result, strategically claiming additional allowances at the end of the year can result in more money going into your paycheck, which in turn provides more money for gift-giving and holiday spending. Withholding allowances can then be reset in the new year.

2. Keep Accurate Records

Giving to charitable organizations over the holidays not only makes you feel good, but it can also be a way to lower your tax burden. When donating, make sure the IRS recognizes the organization before claiming a deduction. Also, keep all documentation of the donation in case the IRS has questions.

3. Give Yourself a Gift

Open enrollment is typically during the holiday season, which means it's time to review your retirement contributions. You can lower your taxable income by making contributions to your retirement plan and, the more you contribute to your 401(k) or IRA, the higher your tax reduction will be. Contributions also help ensure a stable retirement in the future.

Tax planning is often confusing, which is why you should work with a CPA firm. Bergamo Tax & Financial Solutions in Watertown, CT, helps individuals and businesses throughout Middlebury and Litchfield with tax and accounting issues. If you or a loved one needs assistance with financial matters over time, they also assist with daily financial tasks, such as bill paying and checkbook balancing. Schedule a consultation by calling (860) 274-1655, or visit their website to learn more about their services.