Navigating the Tax Season: Tips for Getting Out of the Owe Category and into the Refund Column

Taxpayers fall into two categories each year: those who owe taxes and those who receive refunds. To prepare for the 2025 tax season, individuals should review their previous year’s finances, especially if they owed taxes. Changing withholdings on W-4 forms for employees and adjusting retirement income sources for retirees can help reduce the likelihood of owing taxes in the future.

For those who received tax refunds, there are three options: spend, save, or invest. Spending on necessities or paying off debts can be beneficial, while saving can contribute to building an emergency fund. Investing in retirement accounts, mutual funds, annuities, or 529 plans can help individuals grow their wealth. It is recommended to work with a financial professional to make informed investment decisions and ensure that federal refund amounts are kept as close to zero as possible for better financial management throughout the year.