Get an early start on your taxes with careful planning this year. April 15th is the deadline to file your Income Tax and this doesn't have to be a problem if you maintain records during the year with the concept that you will conserve money when you do it the correct way. If things get crazy and uncontrollable causing you to miss the deadline, don't worry. You can request and get extra time from the Internal Revenue Service. The key to doing it correctly is to just obey several necessary guidelines about keeping records, and allow enough time to do your tax return.
Tax tips run rampant in every article you read on the subject, but it all boils down to this. Figure out how you'll be filing and keep your records accordingly throughout the year, taking time (if need be) once per quarter to straighten out receipts, separate expenses into categories, and most important, start the spreadsheets you'll need to make filing a breeze.
If you're a person who is self-employed, you'll be gearing your taxes toward filing a Schedule C, Profit or Loss from Business, and will need some extra guidance to make sure your expenses stay organized. These schedules are easy to fill out if you stay organized. If you work for someone, you'll be getting a 1099 (if you are a consultant) against which you'll have to pay taxes or a W2 or W4, with your taxes already taken out. In the latter case, it will be a structured effort to get the best result, and you'll need receipts and supporting documents in case of an IRS audit.
Some areas where you can score big in terms of finding that extra money are in the areas of deductions. One that's commonly overlooked for investors is Form 4952, Investment Interest Expense Deduction. This is one tax tip commonly overlooked. On this form you can claim investment interest expense paid or accrued against any net investment income. Fees for individual retirement accounts, which can run $40 at some places, come off here.
In the area of standard deductions, if you've kept your totals going through the year, you'll see whether the standard deductions will work for you, especially in the area of medical expenses. Self-employed? Keep track of your travel expenses. Even if you work for someone else, if they send you out on business you can deduct things like seminar costs and other items that would appear on an expense report -- hotel/motel fees, airfare, etc. There are percentages against which you calculate if you qualify for things like entertainment expense deductions, so again, the question of receipts and good record keeping becomes important.
If you work at home in your office, Form 8829 for Expense for Business Use of Your Home is an extremely crucial form. Using it with Schedule C, for people who stay at home and work it is a Tax Tips life preserver. You add the portion of your home that is used for your work, and add your legal deduction. With a little understanding, this form is very easy to fill out.
It doesn't take much to get organized and on top of your record keeping. Simply label a series of envelopes with the same expense categories you will use on your tax return: repairs and maintenance; supplies; travel, meals, and entertainment; etc. This is where your receipts will go. Every quarter, enter the receipts into your spreadsheet program, check them off, and replace them in the envelopes. At the end of the year, you will be well equipped to complete your tax return -- and you will have far less drudge work to suffer through!
A number money savings tools emerge once the form is all set to go. Tax tips are no different. When you file your tax online, you have already taken a big step forward, since the e-file procedure (specially in case of simple returns) allows a quicker refund if you are eligible to get one. Some institutions seize this opportunity and are ready to give loans against expected refunds, but here is where you have to exercise caution and weigh the loan implications before plunging headlong. Fools rush in where wise fear to tread. You may reap more benefits by waiting patiently for the refund money.
You don't have to be scared by taxes. Just like all the other obstacles in life, if you spend some time getting ready for it, you will be able to discover some tax breaks for your own circumstances and get through it without any problems.
Learn How to Deduct Mileage for Commuting and other hidden Tax Deductions and Credits that can save you tons of money.
About the Author:
Ron Finkelstein is NOT a Tax Attorney or an accountant. He is merely a small business owner who has paid a lot of money over the years to learn a whole lot about Taxes and Time Management. I hope you enjoyed learning how to maximize your limits on qualifying for tax credits and deductions. Go here for more information: http://www.tax-deductions.info/
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