Taxes are the necessary aspect of every financial decision. With tax filing due soon, this time consuming and tedious task can be made a little easier and refunds can get just a little bigger with careful planning.
“People will avoid thinking about taxes all year long and when it comes time to file they begin scrambling and end up spending more time and money than they need to,” says Kevin Strawbridge, former accountant and now President of online savings hub DealTaker.com. “Awareness about money savings tips and some early preparation can save you more time and money than you may think.”
- Get ready. Gather the information you need to do your taxes, such as the W-2 form from your employer and any 1099 statements from your bank or other financial institutions.
- Starting this year everyone must e-file . If you are expecting a refund this year, file early. If you expect to have to pay, wait until closer to the April 18th due date to file.
- Use do-it-yourself software like TurboTax or H&R Block’s At Home software to save on the cost of preparing your return. For extra savings, don’t forget to use resources like the DealTaker.com tax page to find special discounts on tax software programs and other tax-related services.
- Adjust your W4 to avoid paying more than needed, so you have more in your pocket all year long and will not be waiting for a refund next year.
- Start now organizing receipts and statements for 2011 using tools like direct deposit and online accounting sites/software to track income and expenses. Finance management software programs like Mint.com and Quicken Online are available free online.
- Claim all the tax credits and deductions available to you. Don’t forget children, mortgage interest & taxes, college expense, etc. Also, make sure the program you use includes charitable deduction tools to help you substantiate the value of goods you give to charity so that you can fully claim the charitable contribution deduction you deserve.
- Profit from self-improvement. Qualified medical costs that exceed 7.5 percent of your AGI are deductible. That’s a high hurdle, but consider what could put you over the top: prescribed weight-loss programs, stop-smoking classes, acupuncture, chiropractic care, therapy, braces, eyeglasses and lead-paint removal if you have a kid at home.