Here are the top five must do's for your successful tax filing. People lose so much money by not paying attention to tax savings advise so I am including these top 5 tips to help you but, if you have questions on other tax issues, please email me and hopefully, I will be able to post another top five tips to assist everyone. Here we go:
1st, Organize yourself. The most costly mistake that people make, is not being organized. Gather all your receipts and documents and just sit down for half hour and make piles. Make a pile for gas receipts, mortgage payments, real estate taxes, contributions, medical expenses, unreimbursed employee expenses, supplies etc. Just making these little piles could possibly save you big money. I can't tell you how many people have their taxes prepared and don't bring their accountant any receipts, causing them to miss out on money saving write-offs. If only once per year, make this the time of year you organize yourself.
2nd, Make any final estimated tax payments by January 15th. If you received extra income throughout the year, or if you won money, or if you sold some stocks and had a capital gain, or if you increased your dependents on your W4 because you needed extra money in your paycheck or if you just feel you are going to owe money when you file your tax return, make an estimated tax payment. Don't worry if that estimated tax payment put you over the top because it's better to get a refund than to owe money. Owing money with your tax return can be very costly because penalties and or interest will be added to your tax bill so if you are unsure, make an estimated payment before January 15th to play it safe but more importantly, to not waste any of your hard earned money on penalties and or interest.
3rd, Contribute to an IRA. Contribute anything you have, whether it's $500 or $5000, anything means big money for you. First of all, you have until April 17, 2018 to contribute money into your IRA for tax year 2017. If you weren't aware of this, you just received another 3 1/2 months to get some money together. If you get paid weekly and start in January, that is 15 pay weeks to save money into that IRA account. If you deposited $50 per week that is $750 into your IRA without even thinking about it. Secondly, not only is your IRA tax deductible (limits may apply) which will lower your tax burden, you also have an account that is growing for your retirement, a Win Win situation for you. If you don't have an IRA, go to your bank or any bank and tell them that you want to open an IRA account and they will assist you from there. WARNING, make sure you tell them that you want to make the contributions for tax year 2017 otherwise, they will apply your deposits to the new tax year and you won't be able to take advantage of the savings until the next tax season.
4th, Try to itemize your tax return. This 4th tip is in conjunction with tip 1. If you don't have your receipts together, there is no way for your tax preparer to know if you would have qualified to itemize your tax return and you will receive the standard deduction. Items that can potentially itemize your tax return are the following but are not limited to medical expenses, real estate taxes, mortgage interest, contributions and unreimbursed employee expenses. Every dollar above the standard deduction that you can write off is a dollar more subtracted from your adjusted gross income and the lower your adjusted gross income, the less money you will owe in taxes.
5th, File on time! Your income tax return for tax year 2017 is due on or before April 17, 2018. Get them done! If for some reason you cannot file your return on time, make sure you file an extension with form 4868. This allows you another 6 months (New filing date October 15th) to get your taxes done. HOWEVER, people think that filing an extension means that you can pay your taxes due on October 15th, IT DOES NOT MEAN THAT. An extension is for filing your taxes only, not for paying your tax bill. You must make every attempt to pay what you believe is your tax due by April 17, 2018. If you don't pay your tax due by April 18, 2017, you will be subject to severe penalties and interest so please, heed the warning.
I hope these tips were helpful. If you are interested, Amazon sells a great tax organizer for a few dollars that can help you start off your new year Financially Smart and Financially Prepared. Here is the link for you>> http://amzn.to/2VNBjJC