Many Americans dread the first few months of the year because it’s tax season. It can be stressful and overwhelming to file your taxes, and on top of that, some people end up having to cough up additional money to give to Uncle Sam. However, filing your taxes don’t have to be such a negative experience! Help prepare yourself for tax season by being better informed and adopting best practices. We’ve got some tips that will help you feel more ready next tax season.
Tax law is complicated. The US tax code is over 10 million words long so it’s no wonder why so many people feel intimidated by it. There are, however, things you can do to help you navigate the complicated world of income taxes. There are several free tax software programs out there, and while they tend to be more basic in what they cover, a lot of people find that these free programs get the job done. Additionally, a lot of the big nationwide tax firms offer free tax consultations with their accountants. This is something that not many people know and can come in handy if you have questions while filling out your taxes.
For people whose income is a little less straight-forward, or for people who have lots of deductions to claim, these basic tax services may not be enough. If this is the case for you, there is an option to upgrade to a “pro” version of the tax software that can handle more complicated situations. Or you could choose to use a tax accountant because of the personalized service they provide. While there is a higher cost upfront, using an accountant can help you get deductions that you may not have known about. Often, the money saved will more than cover the cost of the accountant, but a lot of people think it’s worth it just for how easy and stress-free it is to have someone else do it for them.
A big refund isn’t necessarily a good thing. It’s important to remember with taxes that when you get a refund, the government isn’t giving you any money. They are simply returning money to you that you’ve essentially loaned to them at 0% interest. This works out great for the government, because they get that loan interest-free. You would be much better keeping that money in the first place so you can get interest from it from a savings account or investments. This is why you often hear people saying that you should try to break even with your taxes. This means that you won’t be giving the government a free loan and you won’t have to pay up when you file your taxes.
The best way to ensure this is to make sure you are being careful when you fill out any income tax forms. Make sure you use any worksheets provided with the form to ensure the number of exemptions you are claiming is the right amount for your situation. Doing your due diligence with your tax forms can save you a lot of headaches in the future, so make sure you pay attention. You’ll thank yourself next tax season!