It’s only January but April 15th is right around the corner! Tax commercials are in full swing and this may be a stressful time! Here are some tips on how you can make this a great tax season!
1. Get Organized
Start a file folder to hold all your tax documents. Right now you will be receiving W-2s in the mail, giving statements, student loan interest statements, and many more. Keep all these documents in one safe place so you know where everything is! This is something that you should start doing throughout the year too if you haven’t already. You will probably have more tax deductible receipts that you’ll have to hold onto for 9 or so months. Make it easy on yourself and put these all in the same place when you get them.
2. Start ASAP
As soon as you have all the statements you need, start filing your return! If you have a refund coming, don’t you want that as soon as possible? Also, it’s never enjoyable to procrastinate and wait until the last minute to deal with the IRS.
3. Use a Free Software (if possible)
If you’re recently out of college and are trying to save money, look into using a free tax prep service. Last year we filed for free with TurboTax online and it worked great! We only had W-2s, some giving statements and student loan interest documents. We aren’t too complicated yet. When we have a house and more random items that will impact our taxes, we will probably have a tax professional do our taxes. If your tax life is still easy, definitely go the free route!
4. Reevaluate Your Tax Withholdings
Once tax season is over, reevaluate your withholdings from your employer. Did you have to pay more taxes after you filed your return? Or did you have a huge refund? As nice as it sounds to get a check from the government in the Spring, it’s not the best case. When you get a large refund, the government has just been holding onto your money interest-free for the whole year. It would be more beneficial for you and your budget to get this money equally throughout the year by not paying as much in monthly taxes. Your goal should be to get $0 and owe $0 at the end of your tax return. Talk with your employer and fill out a new W-4 so that your withholdings will better reflect you and your current life situation.
I hope these 4 tips will help you for your 2016 tax return and prepare you for your 2017 tax year!
Peace and love,