Tax season is usually a stressful time for everyone. But there are certain things you can do to remove the stress while ensuring that your taxes are correctly calculated and filed. Even if you’re not a finance or tax expert, these simple mistakes can be avoided.
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It’s all too easy to sit down at your accountant’s desk ready to file your taxes, only to realize you forgot some important tax statements at home. I’ve been guilty of this more times than I’d like to admit, but one way to avoid forgetting is to create a tax checklist.
Refer to last year’s tax return file and write down all of the income statements along with any additional receipts and tax documents that pertain to your situation. Create a simple checklist that includes all tax-related documents, then refer back to this every year while updating it from last year’s filing.
This way you can be sure you don’t miss any important tax deductions or credits, and that you’re reporting all of your income correctly. You don’t want to have to pay for an amendment of your taxes on top of your tax filing dues.
You may not feel qualified to ask your tax professional questions but if you don’t understand something on your tax return, don’t be afraid to ask for an explanation. As an ex accountant myself, I know that we welcome questions from clients because we want them to be able to understand why their taxes come out a certain way.
A CPA may understand specific calculations, and why you qualify for certain tax deductions, but it’s up to you to approve and sign the tax return. So your name is on the line too and you should be able to stand behind your finances.
Source: Marie Claire
If you’re unsure whether or not a receipt or expense can be claimed as a deduction, double check with your accountant before discarding it. Oftentimes you may qualify for a deduction or credit that you may not be aware of, so it doesn’t hurt to save your receipts and verify before tossing them.
Additionally, never throw away important tax-related statements. Instead, shred them so no one can get their hands on your name, address, social security number or any other important financial information.
While most computer programs will calculate and file your taxes for you, there’s still a bit of math involved when adding up your income and expenses for the right deductions and credits. You don’t want to over- or underestimate the cost of specific tax-related expenses when claiming a deduction. Doing so would cause you to pay extra taxes, fees and penalties, so take time to double check your math before signing on the dotted line.
If you're going the software route, several trusted tax software include: TurboTax, H&R Block, TaxAct and e-File. Most offer a federal free edition for simple tax returns but if you're looking to maximize on deductions and need additional tools, most softwares will often drop the price with promotional discounts as tax season draws near.
This year's tax deadline is Tuesday, April 18! Don’t wait until the last few days or weeks of the tax season to start filing your taxes. Give yourself more time to sort out any inconsistencies, or request revisions of tax documents. Waiting until the last minute only increases the stress surrounding the situation and causes you to rush the process, leaving more room for errors and missed deductions.
This is a mistake I’ve made in the past and I ended up having to file an extension (which added to the overall cost of filing fees) because some of my tax statements were wrong and I had to request a corrected form. Do yourself, and your tax professional, a favor by starting the filing process with plenty of time to spare.
When preparing your finances for the tax season, be sure to avoid these top things on what not to do so you can get the most tax savings you qualify for.