Pinterest Stumbleupon Whatsapp
Advertisement

No one likes paying taxes. But we have to do it. Nonetheless, there are a few easy ways you can minimize your tax burden. Nothing so complicated — or morally questionable — as the Double Irish The Doom Of The Double Irish, And How It Affects You The Doom Of The Double Irish, And How It Affects You Technology companies currently using a tax scheme known as the Double Irish will soon have to look for other ways to reduce their tax burdens. Read More or Apple’s tax dodging What Is GAFA? Why The EU Doesn't Love Large American Internet Companies What Is GAFA? Why The EU Doesn't Love Large American Internet Companies GAFA is an acronym for Google, Apple, Facebook, and Amazon — the 4 most powerful American technology companies. Expect to hear it more often. Read More . Just a few simple things you can do to save money.

These seven tips will help you get your taxes in, save money on them, and get your refund faster. So get started today! (And share your best tax-filing tips in the comments below.)

1. File Early

Taxes Due

In 2017, taxes are due on April 18th, which means you have three extra days to file. But that doesn’t mean you should take advantage of them. In fact, you should start preparing your taxes as soon as you can. The more time you have to look at the details of your tax return, the more likely you’ll be to find deductions that you can take advantage of.

Just getting started on your taxes is often the hardest part. Make a point to begin the process sooner rather than later. You’ll be less likely to make errors and more likely to save money.

2. Do Your Own Taxes

Unless your taxes are exceptionally complicated, preparing them yourself is the way to go. With all of the online and offline tax tools 6 Best Free Tax Software to File Your Next Return 6 Best Free Tax Software to File Your Next Return If you're tired of paying to file your taxes, you'll love these six free options for filing your state and federal forms. Read More you can use, there’s no reason to pay a few hundred bucks to have someone else prepare your documents. Many tools are free, and they all help you get your taxes prepared as quickly as possible.

Advertisement

I used FreeTaxUSA to file my own taxes this year, and I’ll be using it to show examples of some of the things I mention below. Like many options, it offers free filing for federal returns and affordable fees (in this case, $13) for state filing. That’s a big savings over having someone else do it.

3. Consider Your Filing Status

If you’re married, there’s a good chance you file jointly with your spouse. And in many cases, that’s a good idea. But depending on your circumstances, it may make more sense to file separately. For example, if both spouses earn about the same amount, filing together might put you in a higher tax bracket. Your deductions might make a difference in how you want to file, too.

Filing Status

If you have complicated taxes, you should look into optimizing your filing status. Some tax software will help you figure it out to see which is your best option. If your chosen software isn’t much help in this area, you can always contact a tax professional When to Hire a Financial Advisor (And Where to Find One) When to Hire a Financial Advisor (And Where to Find One) Hiring a financial advisor can be expensive, but there are a few times when it's absolutely worth here. Here are five of those times, plus resources for finding the best professional for your situation. Read More or just fill out two different returns to see which results in a lower tax burden.

4. Report Accurately

With more and more people doing freelance and contract work, reporting income can be tricky. Take the time to make sure that you’re reporting accurately. You might need to collect a lot of different forms or consolidate some tracking spreadsheets, but getting everything organized before you start will be a big help.

Even if you don’t receive tax forms from your freelance clients, you still need to report your income. Interest, dividends, retirement account disbursements, small business income, rental income, online sales Yes, You Need to Pay Taxes on eBay & Craigslist Sales Yes, You Need to Pay Taxes on eBay & Craigslist Sales Read More , even the money you earned from gambling needs to be reported. Reporting all of this accurately and completely is crucial in avoiding being audited.

FreeTaxUSA also points out that there are a number of types of income that you don’t need to report. These includes things like life insurance proceeds, child support payments, and inheritances. Take a look at the list before you get started so you don’t waste time reporting something you don’t have to.

5. Itemize Deductions

The standard deduction can range from $6,300 to $12,600. And for many people, claiming the standard deduction is the best way reduce your tax burden. But if you itemize your deductions, and look at everything you can use to reduce your taxable income, you might find that you can pay a little less. Even if you don’t, you won’t risk the chance that you missed something.

FreeTaxUSA walks you through each step of the itemizing process, and gives you details on the various types of things you can deduct from your taxes.

Itemized Deductions

There’s also the Common Deductions page that lets you deduct things like tuition, student loan interest, and the Home Energy Credit. Finally, you can select from a wide variety of other deductions on the Other Deductions/Credits screen.

Misc Deductions

6. Use Refund Recommendations

Many pieces of tax preparation software offer a set of recommendations for maximizing your refund (or minimizing your debt). While they won’t apply to everyone, it’s always a good idea to look them over.

When I went through the FreeTaxUSA Refund Maximizer, it asked me questions about dependents, retirement accounts, home ownership, tuition, and a few other things. While I had already identified all of the deductions I could take, there were a few that would be easy to miss, like needing to move for your job. Using a service like this could save you a few hundred bucks or more if you missed something the first time around.

Refund Maximizer

7. File Online

According to efile.com, 91 percent of tax returns were filed online in 2016. That’s a huge proportion, but it also means that millions of people are still mailing in their returns. If you’re one of those people, it’s time to switch to digital filing. Not only will it save you time, but it will also help you get your refund faster.

You might be nervous about online tax security How to Stay Safe from Tax Fraud This Tax Season How to Stay Safe from Tax Fraud This Tax Season Tax fraud is on the rise, and filing your taxes online makes you a target. What can you do to make sure that you aren't the victim of tax fraud this year? Read More , but you needn’t be overly concerned. As long as you follow common-sense precautions, your financial information will be safe. And even moderately complicated taxes can be filed for free online, so you really don’t have many excuses not to.

Don’t Pay More in Taxes Than Necessary

If you don’t follow the steps above, there’s a good chance that you’ll pay more in taxes than you need to. If you choose the best filing status, accurately report your income, maximize your deductions, and file online, though, you can be confident that you’re saving as much as possible. Taxes can be complicated, but using the tools that are available can make the process much easier.

Which tools do you use to file your taxes? What advice do you have for people looking to minimize the taxes they pay? Share your tips and advice in the comments below!

Leave a Reply

Your email address will not be published. Required fields are marked *

  1. Zhong
    March 30, 2017 at 3:43 am

    How do you know if you've paid more taxes than you should have?

    • Dann Albright
      April 22, 2017 at 3:06 pm

      Your tax forms will tell you that. You compare the amount of taxes you owe with the taxes that have been withheld from your pay check. And, if you've overpaid, the IRS sends you a refund.

  2. Howard A Pearce
    March 22, 2017 at 5:41 pm

    "No one likes paying taxes. But we have to do it"

    I don't support the taking of property from the rightful owner without that owner's consent / contract / permission
    When that occurs we have THEFT - see the Wikipedia definition

    Of course if you are the state you can merely legalize that action

    I can imagine people in germany saying "we hate killing jews but we have to do it"