Filing taxes can be an intimidating process and in the stress of it all, sometimes we can forget to do the obvious or skip over the basics, making it even harder on ourselves. If you file your own taxes the following three simple tips can save you time, headaches and even money in the long run.
While one of the more redeeming qualities of tax season is the idea of receiving a refund check from the government, it is not necessarily a good thing. A tax refund means that over the course of the year you overpaid on your taxes, allowing the government to hold that excess money throughout the year without paying you interest on it. If you can’t borrow interest free money from a bank, why let the government borrow from you? Instead of overpaying and receiving no return on your money, you could have paid less throughout the year.
While penalties can be incurred for underpaying, if you consistently receive a large refund and nothing material is changing in your income sources, you should consider lowering your tax withholdings throughout the next fiscal year.
We tend to look towards the tax day with a “let’s just get this over with” mentality. The problem is that running through your taxes too quickly and in a disorganized manner may not save you time in the long run. By setting aside the proper amount of time to do your taxes slowly and methodically you will have fewer errors and have a better chance of maximizing deductions.
The headache that mistakes on your tax filings will cause later on is simply not worth the trouble. It is better to take the time now to enter your information correctly than to deal with it down the line, especially considering the possibility of incurring additional penalties for the errors. The saying goes that an ounce of prevention is worth a pound of cure, and this is certainly the case for filing your taxes.
The IRS’s website contains answers to many of the most common tax filing questions. They offer interactive tax assistance, electronic payment options, various tax calculators and a trove of reliable tax information straight from the source. When we search questions using a regular google search, the first suggestions that come up are often paid advertisements for tax software. While they may answer your question, they will include their sales pitch along with it.
Sometimes the simplest solution is the best solution. To receive unbiased, dependable and specific instructions your best bet is to start your search on www.IRS.gov.
These three simple tips can help you get the most out of your tax filing. Approach it with a can do attitude and don’t forget that the simplest things can sometimes save you the most amount of time.
Read more tax strategies from Twelve Points here.