6 Things Everyone Should Know About Taxes

Posted: Oct 6 2019, 1:34pm CDT | by , in Tablets

 

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6 Things Everyone Should Know About Taxes

Doing Taxes. That confusing, tiring and scary process that gives all of us headaches. Managing your tax returns, making sure you’ve covered all the technical details, getting the figures right and all the hassle behind it can be really stressful, especially if you’re not passionate about numbers or accounting.

In order to help you better manage that tedious task, we’ve created this 6-points cheat sheet that you can use for the next tax season.

1. Save The Trees, Submit An E-File

Whether you want to save trees, money or just to get it over with, in a faster way, using a Tax Return Software can be extremely helpful. Using one will make it easier for you to do your taxes as the forms that you’ll need are already built-in. Getting a refund, if you’re owed one, will also be faster.

There will be some instances in which you’ll need to file a paper return. Be sure to do some research on which IRS form have to be submitted and in which form, for your tax situation.

2. Lower Your Tax Bill by Using Exemptions

Just by being a contributing member of the society, having children or being married could get you some sort of tax discounts. They are called exemptions and can help reduce the taxed income amount by a great deal.

Here’s a simple example, let’s say that you make 50,000$ per year and you’re in the 25% tax bracket. By claiming only one exemption, you will end up paying 925$ less in taxes. Make sure to check the exemptions and see for which you can apply.

3. Save Thousand by Itemizing Your Deductions

When it comes to itemizing you will have to make a decision between two choices:

Standard deduction – for the deductions you deserve, if your taxes are simple, the government won’t make you go through a complicated process. Using the standard deductions, like the ones mentioned before, you will reduce the amount of income you’ll pay taxes for. In general, most of the taxpayers who take the standard deduction benefit of cut between 5,800$ to 11,600$

Itemizing your deductions – by doing this, you will list out every deduction you found out you qualify for. When the sum of all the deductions is higher than the standard one, usually people itemize them. Mortgage interest payments, medical expenses, and large charitable donations are some of the things people could include in the itemization.

Choosing between the standard or the itemized deduction is mostly a matter of money and time. By taking the time to itemize, some people end up saving hundreds or even thousands of dollars.

4. An Audit Is Not the End of the World

Audits are frustrating, no doubt about it, and also very stressful. But your financial world won’t be crashing down by an audit notification. Certain flags will automatically trigger an audit. But that’s because the IRS has to process millions of tax returns, so they have this system set up. This doesn’t mean that you’ve done something bad, it only signals that might look like you’re trying to defraud the IRS, or that you’ve made a simple math mistake.

If your return was done correctly, you’ll be able to prove it and the fact that you are paying all your taxes. Doing that, the IRS will leave your return the same and the audit will be done without any fines or jail time.

5. Avoid Rapid Refunds

If you work with a tax preparer you have a high chance of being offered an instant or rapid refund. Do not take it!

Although it will seem like a good idea and look like you will get your tax refund quicker, this rapid refund is, in fact, a ” refund anticipation loan ”. This short-term loan is very likely to have some interest rates hidden that will take a big chunk of your refund – 50$ or more.

6. At Times You Might Need an Accountant

For some people, doing their taxes might seem like a piece of cake. Unfortunately, some of us need the help of a professional in order to navigate the intricate paths of the tax code.

In some cases you should definitely consider an accountant to make sure you’re finances are safe. If you’re trading often, if you have your own business or if you’re a freelancer, you should consider asking for professional help. This is especially true if you are thinking of taking complicated deductions and making big life changes like having a baby or buying a house, or if you’re making non-cash donations to charities.

Ultimately you should take a look at your financial situations, your options and the available time you have and decide which option is best suited for you. Keep in mind that tax returns are a serious business and the IRS should not be messed with.

This story may contain affiliate links.

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The Author

<a href="/latest_stories/all/all/2" rel="author">Luigi Lugmayr</a>
Manfred "Luigi" Lugmayr () is the founding Chief Editor of I4U News and brings over 25 years experience in the technology field to the ever evolving and exciting world of gadgets, tech and online shopping. He started I4U News back in 2000 and evolved it into vibrant technology news and tech and toy shopping hub.
Luigi can be contacted directly at ml[@]i4u.com.

 

 

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