Are you an on-the-ball February filer? Or will you wait until the last possible minute on April 15?
So whether you are still working on your taxes, or simply looking to the future and hoping to get some advice to improve your 2016 return, check out these helpful tips and apps.
Write-Offs and Deductions
A surprising number of people miss out on rewarding deductions and write offs. For example, you wouldn’t think parents would forget to claim children under 17 as dependents, but many do.
Did you know that you can deduct your pet if you adopted from a recognized charity? Or what about student loan interest or mortgage interest, are you remembering to claim those? If you take the time to research overlooked deductions, you’re practically guaranteed to find a few that apply to you.
You may have forgotten to deduct your adopted mutt, but surely you remembered to write off all possible business expenses, right?
Here again, many taxpayers fail to report or even track business-related write offs. The little expenses like paper and pens can add up, so make sure you keep track of your purchases. Take advantage of apps like MileIQ to log mileage reports and sync it with your tax software. Equipment purchased with a Fair Market Value Tax Lease is also eligible to be written off come tax season.
Organize and Prepare
As with any task, organization and preparation are key to maximizing your success. Many taxpayers set themselves up for a bigger headache and a smaller return by not tracking deductible expenses or ignoring their withholdings.
In addition to the above deductions and write-offs, be sure to track donations. Charitable donations are the gift that keeps on giving: You bless someone in need, you get to feel good about yourself, and you get a tax write-off. That is, you get a tax write-off if you remember to track what you give and save with appropriate documentation.
That’s where apps like iDonatedIt save the day. IDonatedIt keeps track of your donations and their value so you have them for easy reference during tax season.
What’s the best response you can hope for with your taxes, a big return or no return? Although a big check might make you feel like a million bucks, it’s actually better to receive no return. A big return feels good because it’s a large sum of money all at once, like a bonus for having a good year. However, you could have had more money if the right amount was taken out of your paycheck throughout the year.
Apps like TaxSlayer help calculate your expected refund so you can adjust your withholdings to maximize each paycheck. That way you can earn interest on your money throughout the year, allowing it to grow to a value greater than that ever-alluring lump sum.
Your filing needs and preferences will be as unique as your finances and personality.
Do you have simple taxes and a DIY attitude? Then take advantage of the IRS’s Free File and do your taxes for — you guessed it — free.
Are your needs more complex? Ask yourself, what will cost you more: an accountant, an audit, or unclaimed deductions and credits? Paying an accountant to do your taxes can really pay off, especially if you don’t trust yourself to file correctly. After all, helping you get the most out of your tax return is their job, and they have the know-how and experience to do it.
Everyone’s tax mantra should be “review, review, review.” Consider doing a test run on paper if you’re going to file electronically (or print out the electronic file to review before submitting). Whichever route you choose–DIY or professional–be sure to doublecheck names and Social Security numbers before you submit. You’d be surprised how many tax mistakes are as simple as a misspelled name or scrambled social.
Managing Your Refund
GoBank found last year 62 percent of consumers spent their refund within weeks of receiving it. However, this year, the majority of consumers said they’ll be saving their refund or putting it toward bettering their personal financial situation, like paying off debt.
Financial responsibility may not be as sexy or instantly gratifying as using your return for a sports car or wardrobe explosion, but it will give you an even greater return on your efile tax return. Smart choices like paying down debt, contributing to your retirement or rebuilding an emergency fund can help secure both present and future happiness. Eliminating debt will free up room in your monthly budget for more exciting purchases, while retirement or emergency funds help ensure financial security during life’s big change-ups.
Bottom line, whether organizing your receipts or spending a return, do what fits your needs and personality. So long as you’re legally maximizing your return, it doesn’t matter if you track your deductions with a sleek app or keep your receipts in a dusty shoebox. But you can use the tips above to help build a personal system that helps you gain less stress and more money.