Right now, you’re probably so caught up in the holiday hoopla that you haven’t even thought about your taxes. But the more you plan ahead for the season, the less stressful filing will be, so don’t wait until January to get started. Here are some things you can do now that will make doing your taxes easier.
Gather your receipts
Holding on to the right receipts can translate into tax savings. Research what the IRS considers deductible expenses and gather any receipts that fit the bill. For example, non-itemizers can deduct up to $300 for cash donations made to a qualifying charity. Married couples filing jointly can deduct up to $600. Cash donations include contributions made by check, credit card or debit card. Educators can also deduct up to $250 of job-related expenses such as books, supplies and professional development courses. If you plan to itemize, you can deduct medical and dental expenses that exceed 7.5% of your adjusted gross income.
Report any legal name changes to the Social Security Administration
Most people change their names at least once in their lives. Typically, it’s because they got married, divorced, or hate the one they were given at birth. Regardless of the reason, all legal name changes must be reported to the Social Security Administration (SSA). This will allow them to update their records, send you a new social security card and make sure you get any earnings you deserve. If you try to use your new name on your tax return without reporting it to SSA, your return will be rejected. Apply early because it can take weeks to be processed which may delay your tax refund.
Be aware that most income is taxable
Some people don’t realize that unemployment compensation is taxable until it’s too late. And unlike last year, there’s been no mention of an income exclusion for 2021. The best thing to do is have federal taxes withheld from your income or make quarterly estimated tax payments. In case you didn’t know, refund interest, virtual currencies and income from the gig economy is also taxable.
Consider adjusting your withholding
If you owed the IRS or rather take home a bigger paycheck during the year, consider adjusting your withholding. Use a withholding calculator to determine the best way to update your W-4 so you have the right amount of taxes withheld from your pay. Then submit your new W-4 to your employer.
Open a bank account if you don’t already have one
The fastest way to get your refund is to have it direct deposited into your bank account. Direct deposit is also safer and more convenient than waiting for a paper check. If you’re one of the 14.1 million Americans who are unbanked, now might be the perfect time to open an account with an FDIC-insured bank or credit union. Before opening a checking account, make sure they charge no monthly fees, low or no overdraft fees and have nearby ATMs. If you prefer a savings account, choose one that has no monthly fees and offers a high interest rate.
Pre-register with ezTaxReturn
When you use ezTaxReturn, doing your taxes is fast, easy and stress-free. Plus, you’ll get the biggest possible refund, guaranteed. Pre-register now to get our best discount when you file.