Would you rather file your taxes or go without your phone for a week?
Twenty-eight percent of Americans dread tax season so much they’d voluntarily give up their cellphones just to avoid it.
Since you have to face it eventually, the sooner you get everything in order, the sooner you can shake off that looming stress and focus instead on things you love.
Don’t be one of the 29 million people who file their taxes at the last minute. Start preparing now and give yourself a head start on tax season.
Taxes equal plenty of paperwork. The best way to avoid mistakes or missing out on possible deductions is to get all documents in order before you start filling out your forms.
Make sure you have records of the most common documents you’ll need, such as:
W-2, 1099 or other records of income.
Records of charitable contributions more than $250.
Information from prior years’ tax returns.
Mortgage interest and property taxes paid.
Child care costs.
Make a master list of all forms and documents you need, even using last year’s return to remind you about your particular situation.
As each document arrives in the mail, check it off and add it to your pile. Organizational efforts today will make filing easier and faster in the end.
Benjamin Franklin may have declared that “nothing is certain except death and taxes,” but that doesn’t mean you can’t do your best to reduce your tax bill. Fortunately, there are multiple credits and deductions that will not only benefit you this tax season but also give your financial future a boost.
Make deductions work for you. Just because we’ve turned the calendar to 2018 doesn’t mean you can’t maximize your retirement savings and reap the rewards on your 2017 taxes. If your employer offers a 401k, you can contribute up to $18,000 in 2017. If you are older than 50, you also can take advantage of catch-up contributions of an additional $6,000. If you don’t have the opportunity to save through an employer-sponsored plan, you can still invest in an individual retirement account, depending on your income.
Contributions to health savings accounts also are an excellent option to reduce your total taxable income. The 2017 contribution limits for HSAs are $3,400 for an individual or $6,750 for a family. You can also make a $1,000 catch-up contribution if you are older than 55.
For the 2017 tax year, you have until April 17 to contribute to HSAs, Roth and traditional IRAs, simplified employee pension IRAs and self-employed 401k’s to benefit from this deduction.
Additional deductions that also may apply to you include state sales tax on major purchases, student loan interest and medical and dental expenses.
<RESEARCH APPLICABLE CREDITS
Filing taxes can be painful, but depending on your situation, you may benefit from a variety of credits if you know where to look.
Many Americans qualify for the earned income tax credit, and if you or your children attend post-secondary education, you could benefit from the American opportunity credit and the lifetime learning credit. There also are credits for saving for retirement and child and dependent care.
<RE-EVALUATE YOUR FILING STATUS
Have you experienced a life change this year, such as marriage, divorce or the birth of a child? Any of these milestones will affect your filing status, which determines your tax rates, deductions and eligibility for credits.
Make sure you are filing under the correct status so you don’t face unnecessary penalties or taxes.
<FIND A PROFESSIONAL YOU CAN TRUST
Did you know that more than 1 million accountants are hired each year in America to help with taxes? There’s a reason for that.
Working with a qualified and experienced accountant can make your tax season experience as seamless and stress-free as possible.
They have the knowledge to help you claim all the deductions you deserve, account for many variables germane to your situation and answer your questions. Their expertise can save you money and give you peace of mind.
Not only that, but a CPA will provide suggestions to help reduce your taxes for years to come, such as offering advice on tax-friendly ways to set up your estate and showing you the benefits of maximizing retirement savings.
Lisa Strohm is founder and CEO of The Athena Network, a financial and life management firm in Upper Saucon Township, providing investment advice and financial planning offered through Good Life Advisors LLC, a registered investment adviser. (The Athena Network and Good Life Advisors are separate entities.) She provides fee-based financial planning and investment management for women, their spouses and extended families. She can be reached at 484-224-3439 or firstname.lastname@example.org.