This year was my first time filing my own taxes, and I was dreading it! Luckily, having all the right paperwork and a little guidance; filing taxes was easy.
So to help you (and me!) get a handle on taxes this year—and better prepare for tax season next year— CPA Natalie Asghari (www.nabacpa.com) shared some of her top tax tips that you can implement in your financial life. Here are a few tips to help you out:
1. Gather all your records in advance.
Gather all documents or forms you’ll need when filing your taxes: receipts, canceled checks and other documents that support income or deductions you’re claiming on your return.
Always keep originals. Make copies of all valid documents that you will provide for filing.
Tax deductions work to lower the amount of taxable income you have. Top tax deductions include:
- Mortgage interest deduction: If you own a home and paid interest on your mortgage in 2015, you’re eligible to take a tax deduction for the amount of interest you paid.
- Charitable contribution: Don’t forget to keep the receipts for any money or goods you donated. Charitable contributions are an often-overlooked tax deduction.
- Self-employed health insurance: While being your own boss can be very expensive, don’t forget to take a deduction for the cost of your health insurance premiums.
- State and local tax: If you pay state and local tax, you can deduct the amount you paid from your federal tax return.
- Student loan interest: If you paid interest on your student loan this year and fall under certain income thresholds, you could be eligible to deduct up to $2,500 student loan interest.
2. Keep track of important records.
The best way to do this is by staying organized throughout the year. Don’t wait until the end of the year to consolidate your documents. Gathering information at the beginning of the year will save you time and reduce the chance of omitting information and amending tax returns when it actually comes time to file.
3. Decide how you’re going to file.
Be sure to consider different tax statuses if you are eligible for more than one. For example, if you’re married and can file either jointly with your spouse or separately, be sure to consider both options. This might be something for you to investigate throughout the year, especially if your circumstances change.
4. Review! Review! Review!
Don’t rush. We all make mistakes when we rush. Mistakes will slow down the processing of your return. Be sure to double-check all Social Security numbers and other personal information on your return. Remember, you are the taxpayer signing the return and you are responsible for any missed information.
5. Hire an accountant or professional tax preparer to do your taxes. Or, Use an online platform
Because constant changes make the tax code more complex each year, you may be more comfortable–and able to use tax savings strategies, pay less taxes or receive a bigger refund–if you have a professional prepare your returns.
However, using an online platform like TurboTax makes filing taxes easy. There are simple step by step instructions to file your return in under an hour.
For more tips head to create and cultivate's blog.