4 Easy Tax Tips
- Dana Johnson
- Jun 18, 2020
- 2 min read
Updated: Oct 9, 2021
Photo Credit/Catherine Song
Preparing yourself for tax time can be a daunting task. Taxes can be intimidating, but it requires, planning, organization, and follow-through. The first tax tip is to get your taxes done early. The effect of preparing your taxes early can help you especially if you are receiving a refund or paying taxes. If you are receiving a refund, then you are more likely to receive it earlier. If you owe taxes, you have carved out more time to pay your tax debt by the due date.
What do I need to file my taxes?
“A tax prep checklist is always a good way to prepare yourself for the tax deadline. A 1099 form should be kept for a self-employed individuals, and a 1098-T should be kept for a student. Social security numbers, birth certificates, childcare records, income of other adults, W-2 forms, 1099-R forms, and any other relevant forms are essential for completing your tax return.
The second tax tip is to organize your tax documents in a manila folder. This will help you organize your life, and make it much easier when you get to the tax office or upload your documents. One thing I have noticed is that taxpayers forget where they placed their paperwork. This can hinder you from finishing your tax return because you have incomplete information.
Third Tax Tip
The third tax tip is to contribute to your retirement accounts. This can lower your taxable income and even with a high income, a 401k contribution can go a long way in reducing your taxes. Retirement accounts cannot be accessed until you are over 59 ½ because touching this money can result in a 10% penalty for being under 59 years of age. Contributing to a pre-tax retirement plan can lower your taxes and the direct-deposit approach is the most effective way to contribute to your account. Taxpayers have maximum amounts for each plan and it is important to take advantage of the tax benefits through consistent contributions.
Fourth Tax Tip
“It is criticially important that you check your withholding from federal and from the state.”
The fourth tax tip is to check your w-4. It is critically important that you check your employer's withholding from the federal and from the state. Sometimes your employer is not taking enough taxes out of your paycheck. This could be disastrous from a tax perspective on the federal or the state side. People need to make sure all of their exemptions are zero and that it is reflected in the updated paycheck withholding.
Preparation and Consistency
In conclusion, preparation and consistency are important for success when completing your taxes. I realize that the anxiety is high during tax time, but taxpayers need to start planning properly and realize that it does not start on the day of the tax deadlne. The result from such tax planning can lead to more tax savings, benefits, understanding, clarity, and certainty.
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