Filing taxes doesn’t have to be difficult or even stressful. In fact, by following these simple steps, you can take better control of your taxes and help maximize your return.
Filing your taxes early has several benefits. You’ll have more time to gather the documentation and forms needed to help maximize your tax savings opportunities. Additionally, you’ll be able to review your tax return thoroughly, which may help you eliminate potential errors prior to filing. Plus, the sooner you file your taxes, the more likely you’ll receive your refund early.
If you have to pay taxes, you should still prepare your tax filing early so you know what you owe. However, you may want to delay actually filing it until April 15 so you can save the money needed to pay your balance in full when you file.
Take the time well before April to verify everything you need to file your taxes. Most of your important tax documents should arrive around January 31. Organize and store your documents and receipts in one place using a system that works for you. Some have found it best to put receipts and documents in an accordion file or digital filing system throughout the year. However you decide to organize your tax information, the key is to make sure it can be accessed easily when it’s time to file your taxes.
Review your tax returns from past years.
Often, changes from one tax year to the next are minimal. So, reviewing previous tax returns will remind you of areas to focus on for potential deductions. Plus, you can organize and store your previous years’ tax records in the same manner, creating a process to use year after year. If things have changed in your life (marriage, divorce, death in the family), be sure to review the allowable deductions available to you or speak with a tax expert for help.
Maximize your retirement contributions.
Learn how much you can contribute each year to your retirement accounts and aim to make the maximum contribution possible. Typically, these contributions are tax deductible, which can be a nice benefit at tax time. You can still contribute up to $6,000 to an IRA (up to $7,000 for those 50 years of age and older) until April 15.
Keep a record of charitable contributions.
If you make charitable contributions throughout the year, be sure to keep the receipt or acknowledgment of your donation given by the charitable organization. For example, if you recently donated $500 worth of items to Goodwill, you should keep the receipt or acknowledgment given to you at the time of your donation. You could possibly deduct that donation.
Automate or outsource tax filing.
There are many resources available to help make filing taxes a little easier – online tax filing services, accounting firms, or independent CPAs. The IRS also offers a free tax filing software to those with an adjusted gross income of $58,000 or less. Using any of these services may help you to maximize your deductions, avoid making errors, and file easily using the IRS’ electronic filing system. If you own a business, it’s likely beneficial to use the services of a trusted CPA to be sure you’re filing properly and maximizing your deductions.
By following the six tips above, you’ll be better prepared for this tax season, have more control over the tax filing process, and may even find the process less challenging.
© BancorpSouth 2019