It’s never a good feeling at tax time to learn that you owe money for one reason or another. It’s even worse when those taxes start to pile up or earn penalties on top of the amount owed.

As the 2024 tax year comes to a close and you begin to look ahead to next year but find you’ve got a mountain of tax debt already on your plate, how can you catch up fast, and better yet, how can you get ahead so as not to make the same mistakes again?

Frank Remund, a CFP and IRS enrolled agent with Savvy Wealth, offered some strategies.

Take a Look at Last Year’s Taxes

While it may not help you get caught up on outstanding taxes, Remund recommended starting by taking a look at last year’s tax return (or the one where you incurred the tax debt). This can give you a benchmark to compare where you’re at now to see if you need to change your withholding.

“You can ask, ‘Am I the same, higher or lower [withholding]? And if I know I owed last year, or I got a big refund last year, how much am I withholding now?'” Remund said.

Remund recommended looking to see if anything has “materially changed” in income, deductions, number of children or marriage and so on, at which point you may need to change your withholding.

Increase Your W-4 Withholding

If you’re employed but you owe a lot of taxes, there’s a good chance you’re not having enough taxes withheld from your paycheck, Remund said.

Remund recommended increasing your withholding in the fourth quarter to reduce the amount of taxes you may owe going forward.

Make Sure You’re Not Paying ‘The Marriage Penalty’

Another issue that could be hurting you in your taxes is that, if there’s a significant income discrepancy between you and your spouse, say one of you is a high earner and the other is not, but you’ve set your withholding too low to account for your joint earnings, you could be paying too few taxes. Remund recommended adjusting this to make sure you’re paying the right amount.

Additionally, for a couple filing jointly who are retired and both at least age 59 ½, you want to be careful about keeping your income at a low enough tax bracket so that you don’t end up paying too much in taxes on things like your investments while taking withdrawals from retirement accounts, such as dividend-earning stocks.

Reduce Your Taxable Income

One of the best ways to pay less in taxes is to reduce your taxable income, Remund said. If you’re not self-employed or running a small business, where you can write off many expenses, the best way to do this is to contribute to tax-advantaged accounts such as 401(k) plans and IRAs, Remund suggested.

You can even set one up for a nonworking spouse and use annual catch-up contributions, if you or your spouse are 50 and older, to top off that account and reduce taxable income.

Automate Your Savings

If you’re someone who struggles to save money, Remund recommended making it easy on yourself by not leaving savings up to willpower or mood.

“Automate the process of making monthly contributions. If you know your big paydays are on the fifth or the tenth, make it a priority that money gets moved, whether it’s $50 a month or $100 a month to go into the account.”

Create a Dedicated Tax Savings Account

If you’re among those who find it too tempting to spend the cash you should be saving for taxes in your regular checking account, Remund said, “Some people need to create a separate tax savings account. If you’re a freelancer, sole proprietor, whatever, you tell yourself that one-third of this is gone because you’ve got to pay self-employment tax plus federal and state income tax, so [you’re] not surprised when it comes tax time.”

Look For Write-Offs

For self-employed people, whether you’re a sole proprietor/independent contractor or run a small business, remember to find all the legal write-offs you can to reduce your taxable income. This may be best done with the help of an accountant so you don’t write off ineligible expenses.

Remund said that not every write-off is going to net you big reductions, such as depreciation on a vehicle or adding new solar panels to a home, depending on where you live, but at the same time, every little bit helps.

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