In today's economy, many people are looking to cut costs, save a little here and there, and even downsize their lifestyles. Cutting expenses is important to having a healthy financial lifestyle, but so is increasing your cash inflows.
I know what you may be thinking: "But, I haven't gotten a raise in years, costs are continuing to rise and it simply looks like there is no help in sight." But, have no fear! Even in today's economy, there are certain steps you can take to increase cash inflows to survive.
Amend your past tax returns
Amending past returns can provide additional cash inflows. Year after year, many taxpayers overlook certain deductions that can provide a higher refund at tax time. These deductions often include business mileage, charitable contributions, business use of a home office, and education expenses. Because of this, taxpayers usually receive a lesser refund than what they are due.
If you feel your return can get a boost, consider having an accounting professional review prior-year tax returns to determine whether there are additional deductions that can be utilized. Generally, the Internal Revenue Service will allow taxpayers to amend tax returns for the previous three years from the date of filing.
Get the most from your paycheck
Would you willingly allow the bank to hold your money interest-free? Probably not. But some people allow the IRS to do the same thing. Essentially, many who receive a tax refund at tax time are providing the government with a "tax-free loan."
Instead of allowing the government to use your money year after year, make adjustments to your federal and state withholding allowances. By doing so, you will have additional cash inflows throughout the year to save or invest.
It is important to know the correct amount of withholding allowances; otherwise, you may face penalties for underpayment. The IRS tax-withholding calculator is a great tool that helps you determine the correct amount of withholding tax so you simply break even at tax time.
Create multiple sources of income
Although you may have a typical 9-to-5 job, generating income from multiple sources can help increase your cash inflows. Are you great at writing, bookkeeping or consulting? If so, consider packaging your natural talents into services to be used by others. A little gig here and there not only increases your cash inflows, but may also provide a great opportunity to begin a small business that generates additional income in the future.
Do you have items in your possession for which others may be willing to pay? Selling slightly used items also can generate cash inflows. Whether it is a television set, a collection of books or your vintage clothing collection, your trash may be others' treasure. Consider selling these items via the Internet or have a garage sale to turn your possessions into cash.
Begin taking these steps to generate money you never knew you had. Remember: your choice, your future.