Although it seems early to file your returns, the earlier you get the numbers on your returns right, the better off you could be. Filing your tax returns can be overwhelming, but it doesn’t have to be expensive. Start by understanding some money-saving tips that can help you reduce your expenses when filing your returns. Also, pay attention to tax breaks that you can claim on your return. Here are other ways to save money when filing your taxes.
- Keep Receipts. You probably know how hard it can be to remember everything that you did throughout the previous year. Nevertheless, this is what filing your taxes is about. Forgetting some of your expenses, such as your medical cost, charity, and business expenses, can make you pay more in taxes. Ensure you keep records of all expenses that qualify for tax deductions and credits to save money when filing your tax returns.
- Taxpayer Assistance and Counselling Programs. If you do not know how to file your taxes, use the several programs available. The IRS has multiple programs that can help low-income taxpayers with this process for free. If your income is less than $5600, go to the Volunteer Income Tax Assistance Program and visit sites that can prepare your taxes for free. VITA sites also have IRS-certified persons who can file your taxes electronically. H&R Block Promo codes can also assist you in several tax preparation services. Older adults aged 60 years and above can use the Tax Counselling for the Elderly program.
- Defer Income. Your income tax liability depends on the amount of income you report. If you lower the amount of income you generate in a given year, you can also reduce the amount of tax you should pay. Although it may not make sense to lower your income to avoid taxes, you can defer some of your income into the next tax year. This way, you will avoid paying tax on that amount until the next tax year. For instance, you can request your employer to pay your end-of-year bonus in January so that you do not have to report that income until the following year.
- File Your Taxes on Time. The IRS can be demanding when it comes to collecting what it is owed. Although you can request a tax extension, the IRS expects you to pay the amount by the set date. If you fail to keep the original date, you may have to pay penalties. Late tax payment can attract penalties as high as 25% of the amount you owe. As such, ensure you file your taxes on time. If you do not have the cash to pay your taxes on time, take a personal loan. Such loans have an interest rate of as low as 6%, which is lower than the IRS penalty.
