The tax season has arrived. Here are some tax tips that can improve your filing experience and save you money.
Organize your tax records
The key to a smooth tax season is to keep your tax records organized. Use our Tax Prep Checklist to help gather all of the documents needed for your return. Collect any tax documents you receive in the mail and store them in a safe place with your prior year return so everything will be easy to find when you’re ready to file.
Max out your retirement accounts
You have until April 15, 2019 to contribute up to $5,500 ($6,500 if you’re 50 or older) to a traditional or Roth IRA for 2018. As long as you aren’t covered by a retirement plan at work, the full amount of your traditional IRA contributions can be deducted on your tax return. If you are covered by a plan at work, your deduction may be limited depending on your income. Roth IRA contributions won’t lower your tax bill but the withdrawals will be tax-free when you retire.
Make a fourth-quarter estimated tax payment
If you don’t pay enough taxes throughout the year, you’re going to owe Uncle Sam when you file your tax return. This is caused by either not having enough taxes withheld from your weekly paycheck or receiving income that isn’t subject to withholding such as alimony. In order to eliminate any penalties you had in the fourth quarter, you need to make an estimated tax payment by January 15th.
Itemize your deductions
For tax year 2018, the standard deduction is $12,000 for singles and $24,000 for married couples filing a joint return. Although it may be easier to take the standard deduction, you may actually save more money by itemizing instead. Not only does ezTaxReturn make it easy to claim your expenses, we’ll even compare your standard and itemized deductions so you can get the biggest possible refund.
Provide the correct dependent information
Make sure you provide the correct social security numbers and date of birth for each dependent listed on your tax return. If you don’t, your return will be rejected and you’ll miss out on money saving credits like the Child Tax Credit which is worth $2,000 per qualifying child. Remember, if you’re divorced only one parent can claim the child as a dependent. If you and your ex-spouse both try to claim the same child on your return, one of the returns will be rejected by the IRS.
File and pay on time
If you need extra time to prepare your taxes, you must request an extension by April 15th. This will give you until October 15th to file your return without facing a failure-to-file penalty. If you don’t file an extension and you owe the IRS, you will have to pay a failure-to-file penalty as well as a failure-to-pay penalty. The penalty for filing late is usually 5 percent of the unpaid taxes per month, while the late payment penalty is usually 0.5 percent of the unpaid taxes per month.
You can get your refund 3-6 weeks faster by filing electronically instead of by paper. The odds of making a costly mistake are also minimized because good tax software like ezTaxReturn will guide you through the process step-by-step, completing all of the forms and calculations for you. Start your return now at ezTaxReturn.com.