After the excitement and good cheer of the holidays are over, people find themselves facing another busy season – the dreaded tax season. Generally, by the end of January or the first of February, you will have received your W9s, 1099s and other income documents from your employer(s). Although your employers are in charge of sending you documentation of the income you’ve earned from them, you will still have some work to do. This is especially true if you are self-employed and/or want to save money on your taxes. If you are interested in saving money on your taxes, then you need to keep reading and following the tips listed below.
Prepare in Advance: While many look for last minute ways to save money on their taxes at the end of every year, the best way you can save money during tax season is to begin preparing for it in advance. Well in advance – like January. January is the time when you need to begin getting things in order for the next year’s tax season. For example, organizing your home office and creating folders for various types of documents such as receipts, credit card statements, utility bills and any other tax related documents will help save you time and money as next year’s tax season approaches.
Keep Track of Business Expenses: This is crucial for those people who are self-employed. So many people miss out on thousands of dollars in tax refunds because they are poor record keepers. Business expenses are any kind of expenses that are work related. For example, it may be the purchase of a new suit to meet a new client in, hotel bills, computer repairs made to your business computer, ink for your printer, pens, paper, etc. Also, don’t forget to include cell phone, electric and internet bills if you have a home office as a percentage of these are tax deductible too.
Make Contributions: Many people understand that making yearly contributions to their retirement funds (IRA or 401k) is a great way to increase their tax refund. However, these are not the only types of contributions that will save you money come tax time. You can contribute money to your children’s college funds, donate money or items to charity or give a monetary gift to a friend or family member. If you are thinking big, you could donate a car to kars4kids or if you choose to give a monetary gift then you will need to speak to your accountant first to ensure you don’t exceed the amount of your state’s non-taxable gift laws.
Don’t stop at your car, though. Larger contributions, like a boat donation, can also be made in the name of charity. Whether you have a boat that has been occupying space in your garage or you’re in a bind and need to figure out a way to lessen your tax burden, it is a good call. Additionally, you’re able to give back to a charity of your choosing whenever you donate a car or boat. So give donation a serious consideration the next time you decide to sell one of your old vehicles.
Do it Yourself: What?! File your own taxes? It’s understandable that you may be a little nervous about filing your own taxes, but it’s not hard and you will save money doing this. There are many programs available that will help you file your own taxes and these programs are reasonably priced as well. However, to save even more money, you can easily find turbotax coupons or free services online.
Tax season is stressful for everyone, especially those caught unprepared. However, with the tips above you will not only reduce your stress during this dreaded season, but you will also save money. So, get to work!