Let’s face it: paying your taxes isn’t exactly the most thrilling task you have to accomplish come springtime. However, it is something you’ll want to put a good amount of time towards. Paying taxes is just a part of life, and the more painless you can make it, the better off you’ll be.
In fact, many Americans actually enjoy paying their taxes. This might sound surprising, but it’s true. This might be because they’ve taken some essential tax tips and followed through on them.
What are some tax tips that might help you feel better about this time of the year? Read on and we’ll walk you through what you need to know.
1. Take Another Look At Your W4
Do you remember your first week at your new job? You probably had to work through a pile of paperwork before you could really get started. One of the pieces of paper you rushed through during this time was probably your W4, and it actually bears a very large influence on what your tax return looks like.
What does your W4 decide? The main purpose of this form is to actually instruct your employer how much to withhold from your paycheck each pay cycle. Believe it or not, you do have power over how much money is held back.
Many people don’t know exactly what to put on their W4 and push through it when filling it out for the first time. What you may want to do is go back and adjust your W4 if needed to better your overall tax situation.
If you got a huge tax bill this year, for example, it may be an indication that you did not have your employer hold back much from your paycheck. As a result, all that you owe came rushing at your during tax time – an easily overwhelming experience.
You can avoid this next year by changing your W4 and raising your withholding. You’ll owe less next year when the same moment rolls around.
On the flip side, if you got a huge refund and would rather have some of that money in your pocket during the course of the year, you can bring your withholding down.
You should be able to change and adjust your W4 at any point; just talk to your employer.
2. Contribute to a Retirement Account
One great way to save money when paying taxes? Put some of your income straight into a retirement account.
The federal government wants its citizens to be able to take care of themselves. Thus, contributions to a retirement account (Roth or traditional) are considered tax-deductible.
In short, that means any money you can make in income over the year that you put into one of these accounts won’t be taxed.
In some cases, contributions to these accounts will be limited. The exact limit you might face might depend on your marital status and yearly salary. For example, you can only put up to $6,000 a year into an IRA.
The best thing about this strategy is that it’s one of the few things you can do after December 31 that will still impact your tax return for the previous year. You have all the way up until the tax deadline itself to make a contribution that can then be withheld from the tax return you’re about to turn in.
That means if you’re looking at a big bill ahead, you do have an option to help bring it down a bit.
3. Take Advantages of Various Deductions
There are all sorts of possible deductions you might be able to make on your tax return to help bring down the total amount owed. Far too many Americans skip out on or are unaware of how much they are legally allowed to save.
Working with a tax professional can help avoid this fate, as it is their job to help discover and advocate for every possible deduction and advantage you might be able to take on as a taxpayer.
The deductions that will be most worth looking into will vary from individual to individual. Some of the more common examples include sales tax deductions (where you deduct the cost of sales tax in your state) and charitable donations (which you can get even from dropping off a few old clothes at Goodwill).
You can also deduct things like home office needs, student loan interests, and a whole wealth of other elements. Learn more about various deductions and see what you might be able to do to bring down your income taxes.
4. Keep a Record of Medical Expenses
Did you go to the hospital in the previous year? Did you have to take on any kind of expensive medical or dental care?
The most important thing you can do if the answer is yes is to hold onto every single receipt. One big tax tip is that medical expenses that qualify can be deducted from your tax bill.
We all know these medical bills can get quite huge, so it’s no secret that this kind of savings can be helpful for your overall tax debt.
The only qualifying factor is that the medical expenses must be more than 7.5% of your adjusted gross income. As long as they clear that bar, you should be able to deduct them.
Essential Tax Tips and Tricks
Tax season can be stressful for many reasons, but there are ways to combat some of this inevitable portion of the year. If you’re looking to get around the tax season blues, the above tax tips can be a huge help.
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