Has April fifteenth snuck up on you? Are you trying to figure out how you are going to pay that tax bill? Here are a few things you should know if you haven’t filed your taxes yet.
File For An Extension
Perhaps you had a family emergency. Perhaps you have cut it too close to the tax deadline and need some time to find that W2 that has found its way under the couch. Either way you are going to need a little more time to file your taxes. What you need to do is file for an extension. This will need to be done before April fifteenth to help you avoid the fees that go along with paying your taxes late, but will give you some extra time to get your taxes finished.
Check Your Numbers
If you are doing your own taxes it’s important to make sure that your information is right. Check to make sure your social security numbers are correct. Check your math. Make sure you included all your deductions and, if you are itemizing deductions, the amount is greater than just taking the standard deduction.
Pay The Smallest Off First
If you have state taxes that you can pay off and federal taxes that you can’t pay off, go ahead and pay off the smaller tax bill. Then you will only have one outstanding bill. This also can be a useful solution when you have smaller city and county taxes due. The point is to reduce the amount of places you owe by paying as much as you can in full from smallest amount to largest amount.
Set Up A Payment Plan
If you don’t have the money to pay your taxes, contact the IRS or state and set up a payment plan. You won’t be hit with late fees because you will have resolved how the IRS will be getting their money. You won’t be paying a huge lump sum because the payments will be small in comparison of what you owe. You will even be able to budget it into your monthly budget.
Being thrifty is often synonymous with being a do-it-yourselfer. Often, you can save so much money by cooking your own food, building your own chicken coop, or sewing your own home décor. When it comes to taxes, though, the process can be very intimidating. Now, I understand that there are some very complicated income situations that make it easier and more efficient to take all your paperwork to a professional. However, with so many great online programs with answers for your every question (and which often predict the questions you might have before you ask them), you can do your taxes on your own!
Start gathering all the information and paperwork right now to make things easier on yourself.
1. Income and taxes paid
The first day to e-file taxes for 2014 is January 20. That’s only two weeks away. Even though you may not receive your W-2s until the end of the month, you can look at your end of the year pay stubs and records to find those year-to-date (YTD) final numbers on income, federal and state taxes, health insurance payments. It’s all on your last paycheck of the year. If you’re not anxious to file early, you can always just wait for all the tax forms to be mailed to you by January 31.
Don’t miss out on any tax credits. Whether you gave in-kind donations or monetary ones, you are entitled to those credits. Don’t forget about them.
3. Other tax credits
Car registration, mileage information (if you keep track of them), home mortgage insurance payments, any business or work expenses, education expenses and daycare costs will all earn you tax credits. So, get all that information together, too.
Put all these papers in a file (or pile, if you prefer) and you should be pretty ready to sit down at your computer and get your taxes done relatively easily and quickly anytime after January 20.
Do you do your own taxes?
When you’re ready to e-file your taxes…
Free Error Correction – This software will automatically check your tax return for common errors. If the software finds any errors, it will prompt you to correct them.
Get Your Refund Quick – Who doesn’t want their refund quickly? Filing online allows you to receive your refund quicker than off-line.
Helpful Software – The software will walk you through common deductions and credits that you may be eligible for with its easy and quick question & answer format.
It may not seem like it with all the shopping, cooking, and decorating to be done, but it is time to begin preparing for tax season. Right now! You may be wondering why now is the time when the first date to file taxes isn’t until January 23 next year. Well, while getting your paperwork together early stands to make for an easier, smoother process, there’s actually one aspect of taxes that you must plan for before the end of this year: donations.
In order to get tax credit for any donations, those donations must be made by December 31. That’s only one week after Christmas. Now can you tell me how likely you will be to BEGIN thinking about what you can gather together to donate and where you will then take your in-kind donation during the seven days of post-Christmas recovery?
This is why it’s time to plan now. Even if all you do is figure out what tax-exempt non-profit organization you will give to and make, at the very least, a mental list of what items you plan to donate.
Ideally, you should:
1. Gather your items. It’s actually a great time to do it. Consider it a bit of early “spring cleaning” and de-clutter before all the gifts get opened up.
2. Make a list of all your in-kind donations. It’ll make the tax filing process so much easier to just have all the items written down. I use “It’s Deductible” to figure out the value of all the items we donate. Then, it’s nice because it’ll easily transfer all your information to your tax form (if you use Turbo Tax).
3. Drop off your items and make sure you get a receipt by December 31.
These are three simple steps that can be difficult to do at any time of the year, much less with all that’s going on right now. But if you have items to donate, this is the time to do it. You will be glad you did when you’re sitting down working on your taxes just a few short weeks from now.
What else do you do to get ready for tax season?
Take your pick! With any of these you can easily prepare your taxes with step-by-step easy instructions online, then efile your federal taxes for free (state tax returns are an extra fee… unless you’re lucky and you live in a state without state income tax so you don’t need to do a state tax return anyway… how I miss Texas!).
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So we have gone through the torture of filing our taxes, waited for the money to come in, and now we are rewarded with a nice refund check. Stop and think before spending that money on a huge shopping spree or trip to see Loch Ness. There are other ways that money can make our lives better in an every day sense.
Get Out Of Debt
Nothing gives financial stress relief more than getting out of debt. Pay off credit cards. Bring bills up to date. Pay off student loans or car loans any other kind of loan hanging over our head. Getting out of debt also lowers our monthly cost of living. We no longer have credit card or car payments. If we need to we can lower the coverage of our car insurance to liability (though only if we’re desperate to save some money… which yeah, we are). We save the extra money for retirement, a family vacation, or a rainy day.
Buying a Step Up
We plan to get a better car this year. Not a new car, but a car better than the current vehicle we have. It will be safer and also have better gas mileage. In short it will fit the needs of our family better. We are hoping our next step up will be buying a house. We plan to save what we can over the year and supplement our savings with our tax refund in the hopes that it will be enough for a down payment.
A word to the wise: Always have a plan B when preparing for a needed step up. Tax laws change every year. It is best to use a refund as a bonus, instead of hinging the whole plan financially on the refund.
Preparing For The Future
Are you a little behind preparing for retirement? Use your refund to pad your savings. Is a baby on the way? Use your refund to buy furniture, diapers, and formula. Are you looking for a better job? Use the refund to get the education and training needed for your new line of work.
Preparing for the future is one of the best things we can do with our tax refunds. It keeps us looking to the future instead of looking back and wondering what if.
I am not one of those people who is looking to get as much money as possible out of Uncle Sam during tax season. At the same time I’m not one of those people who would like to give up all I have earned to them either. Here are a few things I check before mailing off my taxes.
One of the ways that I save money on taxes is adjusting my income. There are many things that qualify as a deduction. When I have been self employed I adjust my income by using line twenty seven on the 1040. It helps deduct a part of my self employment tax. In the same general area of the tax form there is a place to adjust income with tuition fees, student loan interest, or even educator expenses. These lower the amount of income that is taxable and thus leads to lower taxes.
There are two types of deductions. There are standardized deductions and itemized deductions. Unless the amount of your itemized deductions is more that the standardized deductions it is better to go with the standard rate. They even put the deduction amounts on the top right side of the the second page of the 1040 with regard to filing status.
The amount deducted from taxable income can also be helped by using the right filing status. Are you a single mother? If you are the main provider of your children you may qualify as head of household. Or perhaps you are going through a divorce. It’s still best to file married filing joint, if you can get along well enough with your ex to split a refund or payment.