Is your home office ready for this tax season? Are your beautiful mahogany filing cabinets being put to good use? One way to maintain a peaceful world is to have your finances in order. That means it’s time to get ready for this April.
Of course, it’s not our favorite topic, but it’s a necessary evil. So let’s get to it! Here are nine tips and tricks to help homeowners survive tax season like a boss!
Organize Your Documents ASAP
Even though you may not have time to create a chronological filing system with all of your invoices and receipts for the year, try to get all relevant documents for the tax season organized as soon as possible. It’s best to have everything on hand, so you don’t have to spend time digging for papers while you’re in the middle of filing your return.
Tax laws are always changing, and unfortunately, it just makes everything more confusing. It’s best to stay up to date with any modifications that may affect you, your household, or your business. If you’re employed, you may notice some changes to your paycheck. Take a look at your current w-4 and become familiar with any new terms or conditions.
If you’re finding yourself strapped for cash, it may be tempting to attempt to maximize your tax breaks by telling some little white lies on your tax form. Our advice, don’t do it. You’d be surprised how many people fudge even small numbers to pay less come April. Unless you’re looking for trouble, be honest. Any lies may cost you way more in the long-run.
Know How You’re Filing
When your single, filing a tax return is relatively straightforward. As you build a family, things start to get a little more complicated on paper. Are you head of the household? Just because you’re married doesn’t mean you have to file a joint return. It’s best to run the numbers and take a look at the numbers to determine which filing status works for you and your family.
Know who you’ll be claiming as dependents. Children fall into this category, but there may be other individuals who you take care of, such as a grandparent or other relative that lives with you.
Do Something Good for the World
Giving back feels good, no matter the time of year. Donate to your favorite non-profit or give some quality clothes away to your local GoodWill. Whatever it is, don’t only do it because it will give you a tax break. That being said, charitable donations are tax-deductible. You’ll have to have an itemized list and any bank statements or receipts.
Do a Retirement Check-in
Many retirement funds are deductible, at least partially. Check on your retirement savings since it may lower your tax bill. If you have a 401k that’s matched by your employer, make sure you’re making out well on the deal.
Credits, Deductions, & Exemptions
Tax credits, deductions, and credits will be your favorite words this April. Each one of these will help to reduce the amount that you owe to Uncle Sam. Take stock of the various terms that apply to you.
Credits directly reduce your tax liability and are directly subtracted from the total you’ll owe. Some are refundable, meaning that you can receive the difference between the credit and the liability in cash if it’s more than the amount that you owe. An example is the Earned Income Tax Credit.
Deductions and exemptions, on the other hand, indirectly reduce the amount you’ll owe by reducing your’ taxable income.’ There are certain forms of income that are tax-exempt, including scholarships and retirement.
Tax deductions are specific expenses that you can ‘write off.’ You can subtract these costs from your taxable income. Property taxes on a second home can be deducted, so make sure you’re getting the break you deserve from that beach house!
Get Help If You Need It
Many people have no problem with self-filing, though others may prefer to hire professional help. In this case, there is a lot of available low-cost software that can be helpful. If you’re in the midst of a conflict or you’re preparing for an audit, it may be a good idea to hire a tax accountant or lawyer.
According to the firm of Rotfleisch & Samulovitch, tax lawyers and accountants can both help with audits, negotiations with collections, and tax reorganization planning. Of course, if you find yourself being summoned to court, you’ll need to hire legal help.
Tax season isn’t always fun, but hopefully, these tips will help make it a little bit easier this year. Homeowners can save a lot of time, energy, and money, by going into April prepared and aware of any breaks that may be owed to them.
Article Submitted By Community Writer