6 Tips on Filing Your Income Tax
It’s our favorite time of the year. Just kidding. It’s our least favorite time of the year: tax season. The Internal Revenue Service stated that tax season will begin on Monday, Jan. 23, 2017. As a cherry on top, they reminded taxpayers to expect a longer wait for refunds on certain tax credits. I wonder if they chose a Monday just to troll us. In any case, it’ll be a long day in front of your computer typing away on TurboTax, with a stack of financial documents flanking you on both sides.
Here are some tips that will make the process go a whole lot smoother, along with some pointers on how to milk every cent out of that tax return.
- Review Your Previous Year’s Returns
Unless you won the lottery or filed for bankruptcy within the last year, it’s unlikely that your current financial status has changed that much. With that said, you’ll probably end up filling in the same information as you did in your last tax return. Save yourself some time and whip out your tax returns from the previous year. It’s like copying the answers from your old quiz when taking the semester exam, except the IRS won’t penalize you for copying.
- Deduct Your Medical Expenses
There are certain medical expenses that you can deduct, such as diagnosis, check-ups, and treatments. The same goes for laboratory works you had done and dental visits. You can also deduct certain premium services from your health insurance. Make sure to gather all your relevant medical and dental information before filing your taxes. That way, you can blaze through it in one sitting.
- Deduct Your Charitable Donations
You gave more than you received throughout the year. Now, it’s time for you to reap the rewards of all that good karma. First, itemize your deductions on all your contributions to charity. If you’ve made cash donations that exceed $250, then you should have a receipt filed away. Likewise, non-cash donations over $500 should have a receipt. However, keep in mind that any rewards you received for contributing to charity—like, say, free tickets to a baseball game—will prevent you from deducting the total amount of your donation.
- Political Donations are Non-Deductible
Last year was an election year and if you donated to your preferred candidate, you might be thinking of deducting the amount you contributed. Bad news: you can’t. This is because donating to political campaigns or organizations do not count as “charitable contribution.”
- Transfer Your Unused Credits.
If you’re married, you can transfer tax credits to your spouse. For example, certain credits for students, like tuition credits, can be transferred to your spouse and vice-versa. In fact, student credits can even be transferred to parents and grandparents after the credits have been used to decrease the student’s tax payable to zero.
- Pros and Cons of Online Tax Filing Programs
Online tax filing programs such as TurboTax and TaxAct are great for students, seniors and those who do not have complicated financial life. These types of programs are user-friendly, sleek and use all sorts of algorithms to cater to your specific profile. For instance, if you’re a student, TurboTax will find relevant deductibles for you.
However, if you work a part-time job, do freelance work on the side, and have a registered LLC (like a simple online shop where you sell your handicrafts), then you might want to seek a professional’s assistance. There are many reputable accountants in the Fort Bend area who can help you sort out your tax documents and save you from a headache or two.