It’s the time of year to begin gathering your information to file your tax return. I want to help make the process easier and less daunting for you this year. Turbo Tax has great advice to help minimize the stress of tax season and you can find tips on the IRS website.
First, have your files organized and ready for tax preparation time. This process should begin at the beginning of each new tax year. I suggest creating a file folder or binder for all your tax documents that can be used throughout the year to collect the information necessary for filing your return. Keep all receipts and statements that you think may be used for your tax return. Once it’s time to file your taxes, all documents should be ready and available for you and your tax preparer.
Make sure to have all dependent information available when filing tax returns. All dependents’ social security numbers are required on your tax returns whether they are a qualifying child or a qualifying relative. Specific rules apply for qualifying relatives, but it is worth the time to determine whether or not you can take the deduction (https://turbotax.intuit.com/tax-tools/tax-tips/Family/Rules-for-Claiming-a-Dependent-on-Your-Tax-Return/INF12139.html). The personal exemption allowed for each person in 2015 is $4,000.
Decide whether or not you want to complete your own return using Turbo tax. The IRS has a great website with information to help you make this decision (https://www.irs.gov/Filing/E-File-Options). If your taxes tend to be complicated, it might be best to hire a knowledgeable and certified tax preparer. I completed my family’s taxes for many years, but found it easier and more beneficial to hire a tax professional. It saves time and the cost is offset by the additional deductions that I was unaware could be taken.
You can save on taxes by contributing to a retirement account each year. If the contributions are deductible, you will save on taxes and will be building up your retirement account. There are specific rules for each type of retirement account, so contact a tax advisor to make sure you take full advantage of this deduction. Even if all contributions are not deductible, it is still beneficial to contribute to your retirement account.
If you have enough deductions, you can choose to itemize deductions which should save money on your taxes. The 2015 standard deduction for single is $6,300 and for married filing jointly its $12,600. Your itemized deductions would need to be larger than the standard deduction or you should just choose the standard deduction. A few of the deductions that can be itemized include:
- Medical and dental expenses
- Home Mortgage expense
- Interest expense
- Charitable contributions
- Business use of home or car
- Work-related education expenses
If you or a dependent child had qualified education expenses for tuition and fees, you might qualify for additional tax deductions. If you aren’t eligible for those deductions you might still qualify for the American opportunity tax credit or the lifetime learning credit. For more information, go to the website at https://www.irs.gov/uac/Am-I-Eligible-to-Claim-an-Education-Credit%3F.
To speed up the process of receiving your tax return, file the return electronically and have the refund electronically deposited into your checking or savings account. It will speed up the process considerably and you will not have to worry about the check being mailed. I remember a time several years ago that our state tax refunds weren’t mailed out until the summer. You don’t want to have to wait that long for your refund!
Doing your homework when it comes to taxes can save you thousands of dollars. Claim every deduction you are qualified for and lower your tax bill. While it may seem like a daunting task, being diligent with your taxes can be rewarding!