A lot of people find the tax season stressful, but it doesn’t have to be. Here are some things you can do now to make next year’s tax season much easier, and make sure you’re poised to get the most out of your tax return.
Know How Life Changes Will Affect Your Taxes
A lot of major life changes can greatly affect your taxes. If you get married, have a new child, buy or sell a home, or gain or lose a job, it is important to be aware of how these changes will affect your taxes. For example, if you are getting married this year, alert Social Security of any name changes, and adjust withholding. Make sure you keep track of all documentation surrounding any of these events—in the event of an audit, you may need to be able to provide proof that they happened.
Keep Tax Breaks In Mind
Review which deductions and tax breaks you will be qualified to take in the 2014 tax season. Research various expenses that pertain to your lifestyle and find out if the IRS will allow you to deduct any of these expenses. For example, will you be spending money to move to a new job location this year? Or will you be donating to charitable causes? If so, certain expenses relating to these may qualify you for tax breaks. There is an abundance of other tax breaks to keep in mind when planning your year. Replacing home appliances with more energy efficient alternatives, putting your child in daycare, home office expenses, business supplies, and even tax preparation and appraisals are just a few areas in which you may qualify to receive tax breaks. Make sure you document all your expenses and charitable donations so you’ll be able to make reference to them when it comes time to fill out your tax return.
Come tax season, one of the most stressful aspects to preparing your taxes can be scrambling to find all of those documents you need in order to help you file your taxes accurately or to allow you to receive certain tax breaks. To make next year’s tax season much easier, designate a box or filing system to store the pertinent documents throughout the year. Keeping a copy of last year’s tax information will serve as a handy reference for next year, allowing you to get your taxes out of the way by filing them quickly.
It is also extremely important to keep all of your receipts for purchases that you will be claiming as tax deductions (and to make any necessary notes on them). These receipts will allow you to keep track of exactly how much money can be deducted and they will serve as proof if you happen to be audited.
Adjust Your Withholding
Consider your tax return (or lack of one) from last year. Use this number to determine whether or not you would like to adjust your withholding. You are not allowed to take more allowances than you are entitled to, but you are allowed to take fewer if you would rather. If you want to get a larger return next year, adjust your withholding so that you are receiving fewer allowances than you are entitled to. If you want to receive a smaller return next year, but have more cash throughout the year, take all the allowances that you are entitled to take.
Over the next year, make sure you hang on to all your documents, adjust your withholding, and learn everything you need to know about how any major life changes can affect your taxes. By keeping these tips in mind, filing your taxes next tax season will be a breeze.