If, like many of us, you wait till the last minute to get your taxes done, then we’ve got some tips for you. First thing, if it’s past January 1st, then you’re already running behind, but fear not, there is still a lot you can do to make your tax-filing season easier on your mind and your pocket.
We’ve identified a few strategies which can not only help you save time and avoid costly penalties, but can completely lower your taxes - sometimes, by thousands of dollars! Check out these tips and put them into action today to save yourself money and heartache.
Nothing like lack of organization with your records during tax time to really throw you off the roller coaster ride that it is. For many people, the biggest hassle is getting all your documents together such as last year’s tax return, this year’s receipts, W-2s, 1099s, and more. Here’s how to get organized:
- Print out a checklist of all the documents you’ll need to complete your tax return.
- Keep all tax-related documents in one place, a folder or box. This way, when you get tax-related documents such as W-2s in the mail, you can put it in one place and have it ready to go. Even if something doesn’t look important, but you’re no sure, keep it. This also includes receipts and other items that have piled up during the year.
- When you’re putting all of the documents, receipts, and forms, in the box, DO NOT just throw them in. Group similar documents together and use file folders to keep them separate from each other.
If you haven't fully funded your retirement account yet in 2018, you can still make a contribution by April 15, 2019 (IRA deadline). Any deductible contribution will lower your tax bill for 2018, and will likely earn you more money in the long run as well. The maximum IRA contribution for 2018 is $5,500 for anyone under age 50 and $6,500 for anyone 50 and older. Contributing the maximum amount can save you $1,500 or more on taxes and the more years you contribute, the more your contributions will earn.
There are many different requirements depending on your employer and what type of retirement accounts they offer, so be sure to consult with your CPA about any opportunities you have to take advantage of this.
You can go directly to the source and get every form you’ll need online on the Internal Revenue Service website. There have a large catalog of forms and publications and you can search for documents by number or by date. If you’re unable to print them out yourself, you can request that they send you a print-out of all of the documents you need by mail.
Gone are the days that you have to go to the library or the post office to get the right tax forms, but if you do prefer picking them up yourself immediately, the IRS website will direct you toward a list of government sites where you can pick up state forms and publications.
And if the above two options are not your style, you can find software online such as QuickBooks or TurboTax which have all of the forms you’ll need. Using these programs also take out the hassle of figuring out which forms are right for you.
Not only does it help you identify the correct forms but filing electronically can be beneficial to you in other ways as well.
- There are less chances of errors as the IRS checks electronic returns to make sure it’s complete. 20% of paper returns have errors compared to only 1% of electronic returns which have errors.
- When you file electronically, the IRS acknowledges that it received your return - something you don’t gain when filing with a paper return. This can protect you from penalties or interest that may add up just in case your paper return gets lost.
- You’ll get your refund faster because the IRS processes electronic returns sooner than taxes submitted by paper. If you’re expecting a return, filing electronically may mean getting your refund three to six weeks earlier because of this. Having your refund deposited directly into your bank account can shorten that time even more.
Just because it’s January, don’t stress. If you organize, identify the right tax forms, and file electronically like we discussed above, you’re sure to file right on time and save yourself some money this tax season.
https://turbotax.intuit.com/tax-tips/tax-planning-and-checklists/tax-tips-after-january-1st/L8fY6OyFl, https://www.fantaxticservices.com/blog/tax-tips-after-january-1-2018.aspx, https://www.cnbc.com/2018/12/07/7-year-end-tax-tips-to-increase-your-refund.html