So you’re putting off filing those income taxes again this weekend?! You are not alone. Most of us cringe this time every year when it comes to tackling that shoebox full of tax paperwork.
Each year, you are one of about 140 million tax returns the IRS processes. Tax return data indicates the average American taxpayer pays between $10,000-15,000 in federal, state and local income taxes, depending on where home is.
So if you’re an average American wage earner, you probably spend about 1/4th of your income to pay those taxes, according to a survey by GoBankingRates. Not a pleasant thought, and enough to keep you procrastinating about tax prep?
Here are 10 ways you can make filing those tax forms less painful – and perhaps less costly:
- Gather and organize paperwork you need – statements, receipts, 1099s – now! Typically, financial institutions and employers do send you the statements you will need, however, glitches happen. You may need to call to request a duplicate be sent.
- Use the IRS publications and worksheets on IRS.gov as a guide. Every year, updates are made, some at the last minute. Before you just start filling in the blanks on your IRS form 1040, read about adjustments that have been made.
- Unusual circumstances this year? Consider hiring professional help. If you moved, sold/bought property or businesses, received an inheritance or large gifts, lived abroad, or adopted/added dependents, you might want help a pro can provide.
- Don’t forget to claim all income. It’s not just your paycheck from an employer that counts as income.
- Review eligibility for exemptions and tax credits. As your life changes, so does your eligibility to claim exemptions for tax credits. Read the rules, because a tax credit is better than a tax deduction.
- Uncover the deductions you may take. Many filers overlook some common deductions for which they qualify, and thereby pay more tax than they need to pay. According to Intuit/Turbo-Tax, here’s a list of the deductions taxpayers most often miss:
- Writing off state sales tax.
- Subtracting reinvested dividends, which increase cost basis for investments sold.
- Claiming out-of-pocket charitable contributions, like ingredients for donated casseroles.
- Student loan interest paid by mom/dad (this is new).
- Moving expenses for a first job.
- Child and dependent care tax credit.
- Earned Income Tax Credit.
- State tax paid when you filed 2016 taxes a year ago.
- Refinancing mortgage points.
- Jury pay paid to your employer
7. Make a last-minute contribution to your IRA or Roth IRA. You may be able to reduce the amount you pay by making a contribution to an IRA, Individual Retirement Account (by the time you file form 1040).
8. Review your math! Simple mistakes in adding and subtracting delay many returns.
9. File asap to avoid tax fraud and scammers and get your refund sooner. While you have until Tuesday, April 17 to file this year, you are better off filing sooner if possible.
10. Avoid penalties and paying too much next year – plan your strategy and resolve to get organized sooner for the 2018 tax year. Getting a big refund for 2017? You might feel good about not writing a check to the IRS, but getting a refund just means you overpaid via withholding from your paychecks. So ask your employer about adjusting your W-2 withholding amounts.