Benjamin Franklin famously said, “The only things certain in life are death and taxes” and come April 14th, hardworking citizens will be scrabbling to get theirs done in time. Tax season doesn’t have to totally stress you out every year. With proper planning and attention to details, you can have your taxes done long before the (in)famous deadline. Here are some tips on how to “keep calm and carry on,” so to speak, and save yourself some headache during this hectic time.
1. It’s the 21st Century – E-File
E-filing is one of the best routes to take when doing your taxes on your own. Companies such as Turbo Tax have expert CPAs and tax attorneys on deck 24/7 to answer your questions via chat or on the phone. Instead of staring at a page for hours in confusion, you can get help with a click of a button. They also make sure your calculations are correct and will refund you if there is interest or penalty fee. Plus, with E-Filing you can do your taxes on your time and you’ll save trees by going paperless!
2. Exemptions Are Your Friends
Exemptions are the government’s way of saying ‘You rock for working!’ If you’re married, have children, or are a contributing member of society you qualify for exemptions, you can save thousands of dollars.
3. Filing Status is Muy Importante
Your filing status is the very first step when you fill out your tax return and the most important. According to the IRS, this status lets the IRS determine your filing requirements, standard deduction, eligibility for credits and deductions, and your correct tax. Your status is one of these five: single, married, filing jointly, married filing separately, head of household, or qualifying widow(er) with dependent child.
4. Learn from Last Year
Look closely over your tax return from last year and really study it. You might find areas where you overlooked potential deductions or errors. Remember, while online tools and programs are helpful, they are only going off the information you provide so it is ultimately up to you to determine whether or not your information is accurate and up-to-date. Give yourself time to really go over your return and don’t speed through it – you don’t want an easily avoidable mistake to cost you thousands in savings.
5. Don’t Forget Your Deductions!
You can choose between taking standard deductions or itemized deductions to save you even more. Standard deductions are based on your filing status while itemized deductions depend on several factors. You will more than likely pick the itemized deduction option if you spent a certain amount on specific tax-deductible expenses. These expenses include charitable contributions, student loan interest, mortgage interest, medical care, and more.
6. Know Your Adjusted Gross Income
Your Adjusted Gross Income (AGI) is a very important number to know while you file. This number is the final outcome once your income and other expenses have been factored in. It is this number which determines what you are eligible for and how much, and there are a good many online calculators and resources to help you, such as this one.
With a little perseverance and know-how, (and these tips, of course!) tax season will carry on without a hitch.
Angie Picardo is a staff writer for NerdWallet, a personal finance website dedicated to helping consumers find the best credit card offers.