It’s about that time of year when Uncle Sam starts collecting his due…ugh. Although 2015 has come and gone, there’s still a lot you can do to make the tax-filing season cheaper and easier, not to mention more profitable. Here’s how…
- Contribute to Retirement Accounts: Did you know you have until April 18, 2016 to make 2015 contributions towards your traditional IRA or Roth IRA? Better yet, if you have a Keogh or SEP fund, you can get a filing extension to October 17, 2016. If you meet the certain financial criteria (click here for more info), putting money into a retirement fund could help lower your tax bill.
- Organize Your Records for Tax Time: Try your hardest to stay organized with the pertinent information required to file your taxes. This includes last year’s tax return, this year’s W-2s, 1099s, etc. To get started, follow these simple steps:
- Print a checklist of all the documents you need to file.
- As important tax information starts coming in the mail, immediately put it in a file specifically for taxes.
- Collect and organize all receipts.
- Know what you spent. If you don’t have it on file, make sure to contact brokers, accountants, financial advisors, insurance companies, etc. and find out exactly what you spent during the year.
- Itemize Your Tax Deductions: The 2015 standard deduction is $6,300 for singles and $12,600 for couples filing jointly. While extra effort may be required, you could seriously benefit from itemizing your deductions especially when they add up to more than the standard listed above. This is especially the case when miscellaneous deductions such as tax-preparation fees, job-hunting expenses, car expenses, etc. add up to more than 2% of your adjusted gross income.
- Consider a Home Office Tax Deduction: Recently, the rules regarding home offices have loosened up a little to allow more filers to claim this break. If you do not have a fixed location for business and use your home office space for administrative or management activities, you could qualify. Click here for more info.
- Provide Dependent Taxpayer IDs on Your Tax Return: Make sure to include taxpayer IDs (usually SSNs) for your children or other dependents on your return. If you do not include this info, the IRS will deny the personal exemption of $4,000 in 2015 for each dependent and the $1,000 child tax credit for each child under 17.
While gathering information and paying taxes is no fun, the process can be made a lot easier by following a few simple steps. Click here for more tips to filing your taxes in 2016.