Tax time. Those two words can strike fear in the hearts of many. There’s no doubt that doing your taxes isn’t much fun for most of us, but there are things you can do to make tax season a little less painful. Follow these tax tips from professional accountants and save yourself a lot less time and hassle.
Stash your receipts
It’s one of the most important tax tips! When it comes time to do your taxes, whether you do them yourself or submit documentation to an accountant, you’re going to need to provide receipts to back up your write-offs. Instead of having to hunt down your receipts each spring, designate a particular spot in your home, whether it’s a file, or a box or a drawer, to stash your receipts all year long. That way, come tax time, you’ll have them all together. (Side note: If you purchase something for your job for which you are not reimbursed by your company, keep the receipt. You can claim the cost on your taxes!)
Familiarize yourself with potential deductions
Deductions can dramatically affect your taxes return, so it’s important to familiarize yourself with any potential deductions to which you may be entitled. Whether they are deductions because you work from home, deductions for business lunch expenses, travel deductions, etc. In a similar vein, it’s important to understand any tax credits for which you may qualify, such as a disability tax credit or credits for activities in which your children are enrolled, etc.
Choose smart investments
There are all kinds of ways to invest your money, but in terms of the impact they will make on your taxed, some investments are unquestionably better than others. Investments that are tax-free may not garner the kinds of high returns as other investments, but that can usually be compensated for by the fact that you won’t have to pay tax on them at the end of the tax year.
Tally your donations
There’s no doubt that charitable donations help out those in need. If you do make donations, keep your receipts for those, too. You can use them as deductions come tax time. When you make a donation, always ask for a receipt.
Contribute to your retirement fund
As much as you are able, it is so important to contribute to your retirement fund. This will ensure that you not only have a nice little nest egg on which you can retire, but also because the more you can contribute, the less income you will have to report. That could knock you down to a lower tax bracket, which means you pay a lower tax rate.
Tax time isn’t what most people consider enjoyable, but by being organized and informed with effective tax tips, you can maximize your tax refund and minimize the amount of hassle involved I preparing your taxes. If you aren’t comfortable doing your own taxes, always hire a qualified tax accountant to navigate the complex preparation process for you.