This article will offer information about how to save money when doing your taxes, filing your tax return, and preparing your taxes.
It’s not that hard to find ways to save money with tax season looming on the horizon. Here are a few tips and tricks that can help you save on next year’s taxes or this year’s, depending on what stage you’re in.
Tax season is always a stressful time for many of us. So, what does the actual filing process look like? What should you know about which tax deductions are still worth your time? Well, read on to find out more about saving money when doing taxes!
Ways To Save Money When Doing Your Taxes
1. Find out if you’re eligible for the Earned Income Tax Credit.
It’s a refundable credit that can be worth up to $6,044. You have to have earned income, so if you’re taking care of your child or an elderly parent and are not receiving pay, you probably aren’t eligible for this tax break. If you qualify, the EITC may offer you an additional cash refund when filing your taxes.
The federal tax credit is available for taxpayers who work but whose income falls below a certain level. If you earn an income and still qualify, this may be the perfect tax break for you. It’s better than not having earned income at all but still be required to file your return and pay federal taxes on your earnings!
2. Take advantage of tax deductions
Working with a professional accountant is one of the best ways to save money with taxes, filing your return, and preparing them. A professional accountant can help you take advantage of tax deductions that you might not have been aware of.
3. Maximize your retirement contributions and minimize taxable income
Maximize your retirement contributions and minimize taxable income. This way, you’ll be paying less in taxes now so that you can manage your finances better when you’re retired or living off a fixed amount of funds each month. For instance, if someone has $1,000 in retirement contributions for the year, they would only need to earn $400 from other sources to live off the fixed monthly income without being taxed on their other earnings.
4. Pay on time
If you owe taxes, make sure to pay them on time or face interest charges and penalty fees. In this way, you can avoid penalties and interest charges on past-due taxes. Not only will you save money paying your taxes, filing your return, and preparing them on time, but it’s the law, so that means if anything goes wrong with a claim or benefits, one of the first things an IRS agent is going to ask for is proof that you filed a return on time.
5. File electronically
If you’re a taxpayer, you must save money when doing your taxes by filing electronically. Filing online can be significantly simpler than filing on paper because the Electronic Return Processing (ERP) system allows each tax year’s information to become available immediately without waiting until all of the forms and documents are processed.
6. Make payments when you can
If you owe any taxes, make payments when you can, and the IRS will show your willingness to pay on time without having to file a payment plan request or face extra penalty fees. Just be sure that if you cannot afford to pay in full that you still send in at least an installment plan request so that you can avoid interest charges on past-due taxes.
7. File a tax extension when necessary
If your funds have been impounded by an agency such as the IRS, or if you’ve had any credit card debt that has changed hands from one collection agency to another, you need to file an extension for your taxes and then work out a payment plan that will allow you to pay off the total amount owed overtime.
8. Get help from your bank
If you’ve been targeted by identity theft, you need to report this crime immediately and then work with your lender so that they can freeze all of the accounts which have been targeted. This way, if you do fall victim to identity theft, you can save your money.
9. Credit card protection ID Theft Alerts are free!
If you have a credit card, it’s important for you to sign up for alerts that will notify you in the event of any suspicious activity done on your account so that you don’t get charged with fraudulent purchases. Credit card protection ID theft alerts are free to sign up for and can save you a lot of money!
10. Check with your state about tax refunds and return credits
Some states require that if you’ve received a refund or are due to a payment from the IRS, they get first dibs on any federal money coming in. Some states even require you to pay your state income tax off of your federal refund or return. Best Ways to Save Money When Doing Your Taxes
11. File taxes together
If you file taxes with your spouse, it’s important that just one person files for the pair so that you can prevent a duplicate refund. This way, if one person has already been given a refund, the IRS will not send out a second one.
12. E-file and claim every benefit you’re owed
If you qualify for any tax credits or rebates, you must get them because these benefits can save you thousands of dollars each year with Best Ways to Save Money When Doing Your Taxes.
13. Choose the standard deduction
If you’re a taxpayer, the Best Ways to Save Money When Doing Your Taxes is by making sure that you choose the standard deduction instead of itemizing your deductions on your return. By choosing this option, you’ll avoid having to gather receipts for the whole year and then compiling them all at tax time.
14. Put tax documents in a safe deposit box
Suppose you have any sensitive tax documents; the best way to Save Money When Doing Your Taxes is by keeping them offsite to reduce the risk of identity theft. This way, if you are a victim of this crime type, your social security number is not compromised, and you don’t end up paying for items purchased by an imposter on your statement.
15. Avoid the common mistake
The IRS is now under pressure to collect outstanding debts in what’s been called the “great American tax gap.” In 2009, the IRS stated that it would focus on the taxes of those with incomes over $200,000 and who have failed to file a return. There are plenty of other ways to get audited, though! Best Ways to Save Money When Doing Your Taxes is by avoiding these common mistakes (as well as any others) when doing your taxes.
Mistake 1: Not using a reputable tax preparer
This mistake can lead to an audit or even worse! Best Ways to Save Money When Doing Your Taxes by choosing a qualified tax preparer, so you don’t need to worry about being audited.
Mistake 2: Not double-checking for errors
Always make sure that you check for mistakes. Best Ways to Save Money When Doing Your Taxes by going over your return for any typos or other errors so that you can get a correct refund amount.
Mistake 3: Not claiming every credit you’re eligible to claim
If you qualify for any tax credits, Best Ways to Save Money When Doing Your Taxes by choosing all of the credits which apply to your situation. By doing this, you can save thousands of dollars on taxes!
Mistake 4: Filing on time
There are two times during the year in which Best Ways to Save Money When Doing Your Taxes is due (April 15th and October 15th). This time also determines when late penalties are imposed. If you file too early, the Best Way to Save Money When Doing Your Taxes is by waiting until the last possible minute so that you’re not paying the penalty for filing your taxes on time!
Mistake 5: Not getting help with Best Ways to Save Money When Doing Your Taxes preparation
If Best Ways to Save Money When Doing Your Taxes is more complicated than it seems, Best Ways to Save Money When Doing Your Taxes by hiring a tax preparer who can answer all of your questions without making any mistakes on your return.
16. For Students
If you are a student, make sure to claim any scholarships or grants. By doing this, you’ll get extra money from the government. Best Ways to Save Money When Doing Your Taxes by filing for these benefits!
17. For new jobs
If you have a new job, be sure to enter information about your W-2 forms or 1099s on your return so that they can accurately calculate how much you earned and how much tax is owed. You must do this to avoid any mistakes in calculations, so if you don’t know what to do, the Best Ways to Save Money When Doing Your Taxes is by having someone else fill out the relevant parts of your tax form.
18. For married couples
If you are married, make sure to file jointly because it lowers taxes significantly. If one person has already filed alone, Best Ways to Save Money When Doing Your Taxes by filing jointly so that you can save more money on your taxes this year!
19. If you have kids
Unfortunately, if you have kids, then prepare for a bigger tax bill. However, don’t be discouraged. Best Ways to Save Money When Doing Your Taxes by claiming their exemptions on your return so that you lower the total amount of taxes you owe the government.
20. Help children who are over 17 and in college
If your child is older than 17 but still in college, make sure they get any scholarships or grants that could help reduce how much they need to pay back in student loans later on. This also will help them qualify for federal aid, which will prevent them from going into debt.
21. Children who have jobs
If your child earns more than $6,350 annually, the Best Ways to Save Money When Doing Your Taxes is by making sure they get a W-2 so that the government can tax them appropriately. It is another important way to help them qualify for federal aid. If you’re having trouble figuring out what to do with this information, contact an accountant and let them know what’s happening! They should be able to help you.
22. Budgeting and trimming expenses
Budgeting and trimming expenses before filing your taxes is a great option if things are tight for you financially. It’s much better to pay off your credit card bills or car loan early than it is to fund your IRA or 401k plan. Prepaying mortgage interest is a good option as well. Improving your credit score can help with this; the best ways to save money when doing your taxes are by checking out www.creditinfocenter.com for some great tips and advice on correcting any mistakes that may be causing your credit rating to suffer. Getting a better rate on an auto loan or a lower rate on your mortgage may also help if you have already refinanced!
23. Use tax software
Use tax software like TurboTax and H&R Block to help you find deductions and credits for which you qualify. It’s important to file electronically if you can because this will reduce mistakes made with numbers. If you must pay a certain amount of taxes that is more than what TurboTax or H&R Block thinks you should, feel free to make the payment when filing your taxes online. It is much easier and less time-consuming than filling out an additional paper form!
24. Get help from a professional with Preparation
If you’re not sure about something while doing your taxes, don’t be scared to seek help! It’s much better for you to ask for advice before making a mistake on your tax forms, so by all means, get in contact with someone who can help you avoid any issues. Getting in contact with an accountant ahead of time and asking for advice is a great way to save money when doing your taxes!
25. Be aware of all the potential deductions
Charitable donations are one way to get a tax break. Things like clothing, food, and other items might qualify for deductions as well. If you have a mortgage you need to pay off, then remember that you can deduct the interest from your loan from your taxes. It’s important to be aware of all potential ways to save money when doing your taxes because then you will prepare yourself for what may come.
If you have any questions about anything I mentioned, feel free to contact me. Comment below or I’ll resolve your query.
Check your state’s website for any additional credit or deduction opportunities not available on federal taxes.
I hope the best ways given in this article will help you save money when doing your taxes.