Tax season may be months and months away, but taking a few extra steps now can help you in the long run.
Tax season prep - lower your taxes now
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Some people don’t have to ask, “When is tax season?” because they have the date memorized, check their pay stubs regularly for withholdings and pre-tax deductions, and read up on personal finance tips. Others put any thoughts of withholding taxes, W-2s, and accountants out of mind until tax season actually hits. However you handle taxes, though, you should know that reading the fine print could put more money in your pocket every month, not just when that tax refund arrives.

You may be used to getting a sizable tax refund (and hopefully you’re putting most of that cash straight into an emergency fund), but that big refund doesn’t mean the IRS messed up its calculations. It means you’re withholding more money that you need to, essentially putting your hard-earned dollars in an account you can’t access or see. Sure, that account gives you a lump sum once a year, but just think of what you could do with that money if it was more evenly distributed throughout the year. Ideally, you could invest it and make money off it, but it could also help pay bills, cover rent, help pay down debt, go into savings, and more.

Sometimes it’s easier (and definitely less of a headache) to just leave your withholding—the amount of money your employer pulls out of every paycheck for taxes—as it is. The exception is if you got stuck with an unexpected tax bill during last year’s tax season—that’s a sign you may want to reconsider your withholding. According to a new survey from finance site NerdWallet, 2 in 5 U.S. taxpayers would rather overpay taxes and get a refund the following year; for everyone else, making a few changes now may be a smart money move.

Put these tips from the NerdWallet team to work, and you could find a little more money in your pocket now, instead of waiting until later.

1. Stop looking at your tax refund as free money

It bears repeating: That sizable refund that comes in late winter or early spring is not free money or a bonus. It’s money pulled from your paycheck, so you’re really just getting your own money back. If your refund is huge, that’s a lot of money you’re not getting in your paychecks—just think what you could do with a little extra per paycheck and a smaller refund.

2. Check your withholding

You’re probably familiar with the W-2, which is necessary for filing taxes. The W-4 is a different tax form, one that determines how much money you withhold with each paycheck. According to NerdWallet’s survey, 64 percent of Americans don’t know what a W-4 is, and 28 percent have never adjusted their tax withholding. Don’t be a statistic: If you want to better tune your withholding to the taxes you owe (avoiding a huge refund and increasing the size of your paychecks), you’ll need to file a new W-4 with your employer.

If you’ve gotten married, purchased property, had a child, or had another life change, you’ll definitely want to update your W-4; even if none of those things happened, the recent implementation of new tax rules means it may be worth checking your withholding. (This withholding estimator from the IRS can help you figure out exactly how much to withhold for your federal taxes.)

If you’re confused or concerned about the process, it’s best to speak with a tax professional; the last thing you want is to make your withholding too small, which would mean you owe money come tax season.

3. Lower your tax burden

If you lower your taxable income, you’ll owe fewer taxes. This doesn’t mean you have to take a pay cut: Depositing money into a 401(k) or an HSA tax-free lowers your income in the eyes of the federal government and gives you tax-free money to use later—a win-win.

With an attitude shift, a little paperwork, and some smart saving, you could find some extra money in your bank account, even without a raise or bonus.