Tax season: those two words have the power to make pure anxiety or hopefulness depending on who you ask.
The tax code is such a mystic document and we tell that the IRS – the boogey man of modern day – is waiting to get us, if we make a single mistake.
Lucky for us, the process of managing our taxes has become smooth thanks to several online DIY services, and we can always call on a trusty certified public accountant (CPA) should we want a bit more hand-holding and expertise in the process.
If you are planning on doing your taxes on your own here are a few tips to ensure and keep tax season relatively stress free.
Tip 1: Stay informed
In the sea of IRS regulations and filing forms, it is easy to get lost in how to proper file your taxes. Some rules and breaks apply to nearly everyone, while others only impact a few, such as those of us who are self-employed.
In order to stay afloat without drowning in tax lingo, it’s best to inform what is available to you well before filing season rolls around. If your situation has changed over the past year, married or having a child, it is important that you discuss your filing options with a professional.
Tip 2: DIY or CPA? Choose wisely
In this age of huge tech resources, it is tempting to do everything from the comfort of your own home. Many sites offer filing services for little or no charge no matter what kind of filing status you fall under, boasting the fact that using their service will guarantee you the highest refund amount available.
The filing process is into easy-to-understand, simple steps that allow you to plug your tax information in. Everything takes an hour of your time and is easy to use, assuming your finances and taxes are simple.
PRO: Relatively cheap, can do your taxes anytime, you get to learn a bit about the tax code
CONS: You’re on the line if you made a mistake. If your taxes are complicated you are missing an opportunity for a tax break or to file something you were supposed to.
Filing with a CPA or tax services company is the most traditional way to get your taxes done. It involves contacting a pro who has expertise and knowledge of the tax code and filing reqs.
What you are taxed on over the course of the year, it makes sense to seek help. To ensure that everything is correct. Factors like your job and whether you are a student are all important in the filing process. When it comes to taxes and Uncle Sam, it is always better to be safe than sorry!
PRO: Peace of mind, get expert support, share information and sit and wait for results
CONS: More expensive, need to do a bit of work to find the right person for you
Tip 3: Find the Break – Get familiar with tax deductions
Simply put, tax deductions lower your taxable income, which lowers the amount you owe in taxes. A deduction is an amount of money you are taking from your earned income. Your deductions come from expenses you had to cover throughout the year. Education expenses are removed from your income so that you owe less in taxes.
Other examples of deductions include charitable contributions. Mortgage interest, and a portion of child care fees. If you are not sure of what to write check with CPA, they can help you with.
Tip 4: Get the credits (tax credits that is)
Tax credits are essentially refunds the government gives back to you for what Uncle Sam considers to be “good” financial or other behavior. They are for those who buy a first home or add certain eco-friendly elements to their home – solar panels.
With the right preparation and knowledge, tax season can be a breeze. Be aware of all the options and benefits available ahead of time to avoid the last minute rush. Proper tax education will ensure that you will not become inundated by the responsibilities of filing!