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Tax time is coming… so one of our writers Jenna Cyprus is sharing some advice to help you tackle tax season. Jenna suggests some tools and websites in this post, but please consider this simply her own personal advice. Jenna is not an accountant and we are not affiliated or sponsored by any of the tools she suggests.
No one likes doing family taxes, but before you know it, it’ll be April 15, and the government will demand that your taxes be done. You could stress about it and wait until the last minute, or you could take advantage of the many tools surrounding you and beat tax season quickly!
That’s often easier said than done as a busy parent, but it’s certainly not impossible. As you plan to tackle the tax season, consider these strategies for maximizing deductions and minimizing stress.
1. Determine Filing Status
If you’re married, determine the filing status that’s most beneficial to you. The vast majority of married partners file taxes jointly, but in some cases, it can be more advantageous to file separately.
For example, if one spouse has a poor financial history, large debts, bankruptcy, or other stains on their credit, you might get a better return by doing your taxes separately. A separate filing can also allow self-employed individuals to take more deductions.
If you’re not sure what your status should be, get a free consultation from a tax preparation service. They can help you determine the best filing status for your situation, but you can still prepare your taxes on your own to save money.
2. Keep All Tax Information in a File
Although it’s a little late this year, create a file for next year’s tax information. Collect receipts from business transactions and other deductible expenses, and transfer your children’s information to that file at year’s end. When you receive W-2s and 1099s in the mail, you’ll know right where to put them. Next, year, you’ll have everything ready to go without having to scramble!
Keep that file handy even after you’ve filed your taxes. That way, you’ll have paper copies in case you’re audited or you need to correct a mistake down the line. It’s recommended that you keep all tax documents for the last seven years.
3. Use the Right Tools
You’re only as good as the resources you have, and thankfully, there are dozens of great resources to help with tax organization and filing. You don’t have to pay a tax preparer to do your taxes, although it’s often easier to do so. Instead, you can use a free filing service like E-file.com to file in 15 minutes or less.
You can also use tools like Mint.com to keep track of your finances throughout the year and Carbonite to back up files digitally. If you’re a business owner, you might also use a tool like Electronic Federal Tax Paying System (EFTPS) to pay your quarterly taxes. You won’t have any issues staying ahead of the game with these tools in your back pocket!
4. Maximize Deductions
As a parent, you spend a lot of money on your children, and that leaves you open to some special deductions. For starters, you get a Child Tax Credit for every qualifying child under 17. You might also be able to claim a credit for child care.
For low-income workers, the Earned Income Tax Credit (EITC) is a great way to reduce the amount of tax you owe and increase your refund.
If you paid to adopt a child, you could qualify for the Adoption credit, worth up to $13,190. This includes travel fees, court fees, attorney fees, and other expenses related to this process.
There are also options for claiming your children’s investment income on your tax return. For example, if you’ve set up college savings accounts for each of your children, the contributions might be claimable.
Again, this might be a good time to take advantage of a free tax preparation consultation to discuss the best deductions for your situation.
5. Optimize Work Benefits
You can claim more for your work dealings than you might realize. If you’re self-employed, keep receipts and records of every trip you took, gas used, supplies, business-related dinners, and more. Any expense that’s reasonably associated with your business can be claimed as a deduction when you file.
Regular employees can also claim deductions related to work. Any non-reimbursed business related expenses can be claimed, as well as travel and office expenses. If you were required to relocate, you can also take a deduction for those expenses.
Your ability to organize and prioritize will make all the difference in your family’s tax filing this year. Depending on your situation, getting a good refund can be difficult, and you don’t want to miss any deductions, particularly if you’ve already made plans to spend the money. Your proactive approach to tax preparation will maximize your benefits and reduce your stress.
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