Before you sit down to start filing your taxes, there are some things you need to know that could save you time, money, and headaches throughout the entire tax season. Here are five things you need to know before you file your taxes this year so that you can put your best foot forward in terms of getting your finances in order and finding every possible deduction or credit you may be eligible for.
Taxes As A Whole Aren't Complicated
Taxes, while they can be complicated, aren’t that difficult if you’re working with a tax service. A tax service will prepare your taxes for you and help make sure that everything is done properly. If you’re considering hiring someone to do your taxes for the first time, here are some key points about using a tax service that should help guide your decision:
1. Tax services usually charge by the hour or by the return so it’s important to understand how much this will cost before choosing one.
2. Tax preparation is just one step in a larger process of filing your annual tax return and it’s important to do more research on this if you’re still not sure what else needs to be done.
Keep Good Records
If you don’t keep good records, then it will be hard for the IRS or your tax preparer to determine how much tax you owe. There is no set time frame for when records should be kept, but since they can help with tax preparation, it’s best not to get rid of them until after the end of the year. Records that can be helpful include copies of receipts and invoices; any documentation related to investments or retirement accounts; If it’s been a while since those documents were filed, contact your employer.
1: Keep good records
2: Tax preparation software has a lot of benefits for people who don’t have the necessary paperwork on hand, but if you do have it on hand, then filing taxes may be simpler.
3: Don’t forget about deductions! You may qualify for deductions to reduce your taxable income. Some common ones include mortgage interest and charitable contributions.
4: Use free government resources! The IRS offers free tools such as Publication 17 and Publication 505 which can help walk you through the process of filing your return, calculating itemized deductions.
5: Prepare now – get organized!
Look Up Tax Deductions
There are many deductions available for people looking to keep more of their hard-earned money. Below is a list of the most common deductions:
1. Child and Dependent Care Expenses. The IRS considers care for children under 13, and your spouse if he or she is not a full-time student or a disabled dependent as child care expenses which can be deducted up to $6,000 per year. You can also deduct the cost of sending someone to take care of dependents while you’re at work – though only if there is no one else available in the house hold who could do so.
2. Medical Expenses. If you have medical expenses that exceed 10% of your income, then they may qualify as deductible items. Your deduction will generally be reduced by any other medical expense you had during the tax year..
3. Home Office Deduction. A portion of home mortgage interest, real estate taxes, utility costs, and repairs needed to make the area exclusively used for business purposes qualify for this deduction. To qualify for this deduction, you must use part of your home exclusively for business and meet certain requirements about the size and use of the office. To determine what percentage of your gross income is attributable to the business, calculate how much time you spend on these tasks:
Make Sure You Have All The Necessary Documents
1. Never give out your personal information, including your Social Security number and bank account numbers, to anyone who contacts you. Scammers may use this information to steal money from your account or take money out of your pay check by getting the right information from an employer.
2. Get a copy of your W-2 (which includes wage and tax data) as soon as possible so that scammers cannot steal it. Most employers send these forms in January or February but it can take longer if they’re in large organizations with a complex payroll system. Call them if you don’t have yours by the time you start filing your taxes.
3. Stay alert for scam phone calls, emails, texts, and social media messages offering help with IRS problems like payment plans or refunds due to identity theft.
4. Don’t believe everything you read on Facebook: If someone posts something asking who has been contacted by the IRS?
Protect Yourself From Scams
If the offer sounds too good to be true, it probably is. Beware of anyone who promises refunds or free money for nothing in return. It’s also a bad idea to give out your personal information over the phone or the internet unless you’re sure about who you’re talking with. Remember, if it sounds too good, it is!