There are certain things we are happy to do in our free time and others that we will naturally put off to the last moment. Taxes definitely fall into this second category. Unfortunately, there is usually a cash penalty for waiting to deal with them.

You have until April 15th every year to file your personal taxes unless you take an additional automatic six month extension. The vast majority of people wait until March or even April to get their act together. In doing so, they lose hundred and often thousands of dollars to taxes that they need not have paid with a little planning.

When is the best time to deal with your taxes? March, February or January? Nope. The best time is in November of the previous year. Why? There are many reasons, but most have to do with the fact November is really the last month you have to get an overall tax plan together and implement it.

Let's assume you set up a meeting with your CPA in November to discuss your finances. You run through everything and note the changes in your life. You are now making a lot more money, are now a father, but you got killed along with everyone else in the stock market. Your accountant might suggest you crank up your 401k contributions and open a college saving account to offset the increased taxes you are facing with your higher earnings. He or she might also suggest selling off some of the stock to take losses to further cut down on your taxes.

Now, let's assume the situation is the same, but you have the meeting with your accountant on March 20, three weeks before the April15th deadline. Do you see the immediate problem? It is too late to take any actions that would reduce your taxes from last year. It is too late to stuff money in your 401k, sell stock and so on. For the most part, your tax situation for the previous year is sealed and delivered. You just cost yourself thousands of dollars in taxes you really did not have to pay.

The simple fact is you are probably going to have to pay something in taxes at the end of the year. Your goal should be to minimize that amount as much as possible. Planning ahead while you can still take action is definitely the way to go. If you haven't sat down with your CPA to discuss your tax situation yet, you should be picking up the phone to make an appointment today.