Tax Filing Magic: Six Simple Money Saving Steps

by Redeeming Riches on March 12, 2014

taxIt’s tax time again, and you’re scrambling for deductions. Yeah, you’re a little slow on the uptake, and you really should have done a lot of tax planning earlier in the year. But, it is what it is. The best thing you can do now is start planning for next year. The second-best thing you can do is maximize the deductions that are available to you from last year.

 

Contribute To Your Retirement

You can always fund your retirement account. It won’t count for this year’s tax filing, but it will for next year’s. If you’re contributing to an IRA, then you’ll be able to deduct all of the money from your income up to the maximum allowable contribution amount set by the IRS.

If you’re contributing to a Roth IRA, you’re out of luck. There are no deductions for contributions here. But, you do get to withdraw all of the money tax-free at retirement.

 

Make Last-Minute Estimated Tax Payment

If you do online tax filing, then making last-minute tax payments might help you out when it comes to filing your taxes. The IRS hates it when you pay your estimated taxes late. It assesses a penalty, but it won’t if you get your tax payment in before December 31st.

What most people don’t know is that you can also make an estimated payment by January 15th to erase any penalty for the 4th quarter of the previous year, but you’ll still owe a penalty for earlier quarters if you didn’t send in any estimated payments for them.

 

Organize Your Records For April

Good organization might not cut your taxes, but it’s save you time when it’s time to file. For many small business owners, programs like Quicken make it easy to stay organized. You can also take additional steps like printing out a tax checklist to help you gather all necessary tax documents, keep all information that comes in the mail (i.e. W-2s, 1099s, etc). Don’t throw anything away – even if it looks unimportant. Odds are, it is.

 

Find The Correct Tax Forms

You won’t find all of the forms you might need at the post office or the library. Sometimes, you’ll need to go online. If you’re using a tax preparer, then you don’t have to worry about forms. If you’re using online software, ditto. But, if you’re doing your own taxes, then you should look up the forms and relevant publications on the IRS’s website.

 

Itemize Your Deductions

While it’s way easier to take the standard deduction, many business owners actually benefit from itemizing. If you’re just doing personal taxes, then consider how much of your expenses for the year might be deductible, like unreimbursed medical expenses, for example. If you’re self-employed, consider that you can write off your health insurance premiums.

 

Use The Home Office Deduction

If you work at home, out of your home, or use your home for any work whatsoever, you might be eligible for a home office tax deduction. If you have a dedicated office in the home, then you almost certainly qualify. Write off the expenses that are associated with the portion of your home where you exclusively conduct business. Measure the square footage of the room, then calculate it as a percentage of the total home. Now, use this percentage to write off part of your rent or mortgage payment, utility bills, etc.

For example, if your home office takes up 12 percent of your home, you can write off 12 percent of your household expenses like the mortgage, electricity, and heating costs. The savings really add up.

Jeremy S loves numbers, paperwork, and finance. He enjoys taking his passion and breaking down complicated processes for the everyday person to understand.

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