It’s that time again–tax season. For many, it’s one giant headache. But with a little preparation you can get a grip on your taxes for good. Read on for insight and tips that can help you make it through on top.
4 tips you can use this tax season:
1. Prepare in advance
Waiting until the last minute on anything is usually not a good idea. Taxes are no different. Getting a handle on them in advance (and throughout the year) can make the entire process go much more smoothly.
2. Stay organized
As with preparing in advance, staying organized can greatly ease the pain of the tax season. You only have to turn the entire house upside down while looking for an important document once before you realize that it makes sense to keep a tax file for such items.
3. Remember your non-cash deductions charities
Even if you didn’t make a monetary contribution to a charity this year you can still deduct other “non-cash” donations such as clothing and furniture. It’s always a good idea to get a receipt from such donations in the unfortunate event of a tax audit.
4. Say no to “refund anticipation loans”
Sadly, there are loans out there that capitalize on your refund–before you even receive it. Even if you don’t end up getting a tax refund, you’ll be paying back on the loan. These loans are usually high-interest and are generally a bad idea.
4 tips for next time:
1. Defer some income
If you’re able to defer income, you may end up paying lower income taxes in the next year. Review what your income and taxes will look like next year to ensure that you don’t inadvertently end up paying more than you should.
2. Make charitable contributions
If you make a monetary donation prior to December 31, you may claim it as a deduction. You can also donate things like real estate and even stock.
3. Contribute to the max with retirement accounts
Adding funds to your 401(k) or similar retirement account is always a good idea. In addition to creating a safety net for your financial future, it can also be used as a tax deduction.
4. Save for college
While contributions to your child’s college fund (or 529 plan) are not deductible on your Federal tax return, it may be acceptable for your state income tax return. Check to see if your state will allow this deduction and if there is a limit to the amount you can claim.