Tax season can feel overwhelming since it directly affects your income.
But it doesn’t have to be.
Although everybody has to pay taxes, there are legal recommendations so you don’t have to pay more than you owe. We’ve gathered the best accounting advice so you can file your taxes like a pro!
1. Include work-related expenses – professional expenses may be deducted from your taxes (make sure to keep a receipt). Some items that could be deducted are equipment and professional dues not covered by your employer. For more information consult with an accountant and take advantage of companies such as Turbo Tax. Alternatively, visit irs.gov and consult the list of deductions and credits.
2. Donate to charity – your donations are deductible. This includes cash as well as food, clothes, real estate, mileage, electronics, and other items. The deduction amount can be calculated on sites such as Turbo Tax. All you have to do is ask the organization to give you a receipt. You can also deduct your out-of-pocket expenses for your work as a volunteer, such as gas. Be aware of the restrictions, though. The non-profit is eligible if they can prove 501(c)(3) status. This information can be found on the organization’s website.
3. Give a gift to your loved ones – in addition to donating to charity you can also deduct gifts up to $13,000.
4. Change your W-4 tax form – the W-4 is a form given to your employer and can generally be changed at any time. The form determines the amount that is withheld from your paycheck and it depends on your claim exemptions. The amount withheld is applied towards your personal income taxes. If you prefer to maximize your refund, consider reducing the exemptions you claim on your IRS tax form W-4.
5. If you’re married consider filing your taxes separately – you may reduce your tax bill significantly if you and your spouse file separate tax returns. Your filing status is an important factor that determines your refund. Some of the categories are single, head of household, married (filing separately or jointly). In most cases, it makes more sense financially for married couples to file taxes jointly. However, this is not true for everybody. Some couples will get a larger tax refund if they file separately. Consult with a professional if you are not sure what is best for you.
6. Become an entrepreneur – business owners can declare certain costs as company’s expenses, which may reduce their tax bill as a result. There are many factors that are taken into consideration, so consult with a professional if you think this may be an option for you.
7. Don’t forget your kids (and parents) – there are a number of ways you can deduct dependent care expenses. Examples include the child tax credit and healthcare expenses. Consult with a professional to learn more.
8. Invest in your children’s future – creating a 529 college savings account for your children is a great investment option. As long as you apply this money towards higher education, you can benefit from a tax-free investment. Find your state’s deadline and policies to explore if this is an option for you. Another option is a retirement investment account.
9. Contribute to an IRA – this is a great option because you reduce your tax obligation while investing in your future. Contributions to individual retirement accounts are recommended in many cases. However, keep in mind that there is a deadline and a limit based on how much you make.
- Turbo Tax is a user-friendly software service to file your taxes online. This is one of the easiest ways to file your taxes. Turbo Tax identifies over 350 tax deductions so you can get the biggest refund possible. In addition, every detail in your tax file is reviewed so that it is 100% accurate and you will not have to pay any penalties. They also offer other products such as a credit score check and a live assistance with a CPA or EA. Other tax services that we recommend are Liberty Tax Service, H&R Block, and Tax Act.
If you decide to use one of the recommended services listed above, make sure to get cashback with Lemoney.com. Lemoney offers the best rates on the market. The best part is that you earn rewards when you invite your friends. All you have to do is become a member and click on the following links: Turbo Tax, Liberty Tax Service, H&R Block, and Tax Act.
Some of us may disagree on how much money should be allocated to each expense, but who doesn’t like to save money? Consult with a professional to ensure the best options for you.
Many people miss deductions every year. Don’t be that person.