Let’s be honest – most of us are not excited to start the tax filing process. It can be confusing, frustrating, and even feel like a waste of time. However, taxes are a fact of life. Having a few tips that make the process quicker and easier can make this time of year feel less stressful.
Plus, once you have a handle on taxes, you can start looking at other ways to optimize your finances through budgeting, financial software, and so much more. So, keep reading to learn a few fantastic tax preparation tips that you’ll keep using year after year.
First things first, do you know what your tax filing status is? If not, you should find out. Using the proper filing status is essential when you send in your information for yearly taxes. Everything from the amount of taxes you pay to deductions you receive and credits you qualify for stem from your filing status. It’s that important.
The problem is, filing status isn’t always apparent. The five statuses include single, married filing separately, married filing jointly, head of household, and widower with a dependent child. If more than one of these fits you, do some research to find out which is the best option.
Thankfully, if you realize you chose the wrong status after you get your taxes in, there are ways to update that so you aren’t penalized for it.
Anyone who files taxes should take advantage of deductions. These are all subtracted from your income, so you end up paying taxes on a smaller amount. The main question here is whether you should go with a standard deduction or itemize your deductions independently.
The standard deduction is set by the IRS and based on filing status. (We told you that was important!). When you itemize deductions, you claim things on your own, such as medical expenses, property taxes, charitable donations, and mortgage interest.
Most people go with the standard. It’s simpler and appropriate in many cases. However, if itemizing gives you a higher level of deductions, don’t count it out.
Assuming you have an employer, you’ve filled out a tax withholding form. This is the document that determines how much in taxes is taken out of your paycheck. It can be hard to get this entirely right but do your best.
If the amount withheld from you is too high, the government is holding onto that money until you get it back when you receive your tax returns. On the other hand, if the amount is too low, you could end up having to pay additional taxes each year – something nobody wants to do.
Unless you’ve gone through significant changes in the last year, this year’s tax return is going to be similar to last year’s. So why not make things easy by pulling out the old one and seeing if you’ve forgotten anything? Tax deductions, dividend and interest, and capital loss balances are all good items to look for.
Once you have your old paperwork, you can use it to guide you through the current forms. Trust us, it will save you time, and it can also ensure you don’t forget anything important. So, if you haven’t been keeping your old filings, find a place for them now and make it a habit to archive them starting this tax season.
We no longer need to fill out paper documents and send them to the IRS. The proliferation of the digital world has made filing taxes more straightforward than ever before. Websites, software solutions, and more can help you get your taxes in way before the deadline.
Another option is to work with a professional. This is useful if you have a complicated tax situation and want to ensure it’s handled perfectly right. A Certified Public Accountant (CPA) is your best bet when it comes to this. They’ve seen it all and can help you pull everything together and get taxes done so you don’t have to worry about them until next year.
You’re prepared and ready to file. There’s no reason you have to wait until you’re straddling the deadline. Instead, consider sending off your filing early and get it over with. As soon as you have all the information you need, you can complete your taxes right away and be done with it.
Plus, if you expect a return, the sooner you file, the better. You’ll get to take all that money the government has been holding from you and put it to better use. And if you want to start working on improving your finances beyond taxes, remember to put a bit of that money away in savings for emergencies down the line.
Filing taxes might not be fun, but it doesn’t have to be something you dread, either. Pick up on the hot tips above, and you’ll get through the process quickly and easily. Then you can move on to other things, like starting a budget or improving your credit score!