If you’re like most people, tax season inspires a sense of dread and overwhelm each year. Compiling documents and making sure you enter everything properly is stressful and takes up your free time. In fact, the average taxpayer spends more than 13 hours preparing their returns each year.
The more complicated your situation is, the longer it will take you to get your return ready.
That doesn’t mean you should give up and resign yourself to losing out on your free time after work. You just need to be smart about how you file. Here are a few proven tax tips to help you streamline the process.
1. Start Early
The best thing you can do for your wallet is to start filing your taxes well ahead of the April 15th deadline. Ideally, start as soon as you receive the previous year’s W-2 information from each employer you work for.
Fill out as much of your tax return as you can as early as you can. When you’re sure it’s complete, don’t wait to submit it until the tax deadline. Go ahead and submit it early. This way, you’ll get your refund sooner and won’t have to deal with delays in the IRS’s processing time.
If you end up owing taxes, filing early will give you a better chance to come up with that sum in full by the deadline.
Remember, if you miss the deadline, you could end up facing costly fines. The last thing any taxpayer deserves is to have to pay the IRS more money because they filed too late.
2. Read up on Deductions
Almost every taxpayer qualifies for a few deductions each year. These deductions reduce your total taxable income, thereby lowering how much you owe the IRS.
Read up on the available deductions and claim the ones you qualify for. The IRS introduces new deductions each year, so it never hurts to give yourself a refresher before you file.
In most cases, you’ll be able to deduct things like student loan interest, mortgage interest, and other qualifying expenses from your tax bill. Depending on your situation, this could save you hundreds!
3. Review Your Filing Status
Life changes happen all the time and they can have a huge impact on your tax return. For example, if you recently got married, you’re entitled to file jointly with your spouse. In most instances, this will save both you and your spouse money.
However, it’s not always the case. That’s why it’s important to review your filing status each year to make sure it’s the financially smart choice. If you can save more on your taxes by filing separately, do it.
4. Double-Check Your Earnings
Mistakes happen and sometimes, payroll experts enter the wrong numbers on your W-2. Get in the habit of reviewing your earning statements at the end of the year.
Double-check them with your pay stubs or direct deposit statements to make sure they’re accurate. If you notice any errors, report them to your employer as soon as possible.
They’ll need to reissue a new W-2 with the corrected information before you can file.
5. Leave Nothing Out
The IRS expects you to report everything you earn throughout the year. This includes income from your regular job, tips, investment earnings, income from side gigs, and even gambling winnings. If you leave anything out, you increase the risk of getting audited or having to pay additional fees.
Instead of taking the risk, make sure to report everything from the very beginning. If you earned it that year, you need to record it on your tax return.
Once you have your income totaled up, double-check your math, and make sure everything is correct. Small errors can delay processing on your return and that means you won’t get your tax refund quickly.
6. Make Your IRA Work for You
You know you should be saving for retirement, but did you know that some contributions to your retirement fund can help lower your tax bill? If you have an IRA, you’re allowed to contribute up to $5,500 each year.
You can use those contributions as a deduction on your taxes. Even better, you can use them every single year that you contribute to the IRA.
While it’s not enough to completely get rid of your tax bill, it can keep it lower.
7. Get Help If You Need It
Figuring out how to file your taxes is both stressful and time-consuming. With so many different regulations to keep track of and deductions to claim, it can be tough to make sure you’re filing your taxes correctly.
The best thing you can do is reach out for help as soon as you feel you need it. Work with an experienced accountant or CPA and let them handle the filing process for you.
They have extensive training and know the ins and outs of the tax code so you’ll never have to worry about overpaying.
8. Deal With Back-Taxes A.S.A.P.
Owing taxes is normal. It’s not something to feel ashamed of or embarrassed by. It just means that you didn’t withhold enough from your paycheck.
As long as you pay it off at the end of the year or establish a payment plan with the IRS, you’ll be fine. However, if you ignore that tax bill, you can get into serious trouble, fast.
Instead of ignoring taxes that you owe, get help from IRS tax resolution services and let them help you negotiate with the IRS.
Keep These Tax Tips in Mind
Filing your taxes can feel overwhelming, especially when you’re trying to reduce your tax liability as much as possible. Follow these tax tips and you’ll be in good shape every year.
As long as you start early, keep track of your earnings, and aren’t afraid to get help if you need it, filing your taxes will be easy.
Once you file and receive your refund, you’ll need to figure out what to do with the money. Instead of spending it all in one place, check out our latest posts for advice on how you can put your refund to work.
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