If you are on this page, chances are that you are looking for some tax filing tips for saving money. In this article, Handy shares with you a few tips that may help you get the most out of your tax savings. These tips can help you even before, during, and after you have filed your taxes. Read on to find out more.
Before Filing
Before filing, make sure you collect all of the essential documents. Apart from tax forms (W-20 and 1099s), you may collect receipts for valuable credits and tax deductions.
Don’t forget to get access to previous years’ tax information. These documents will serve as an ideal reference point to find out about deductions you claimed last year. This step can help you get the most out of your tax savings as you won’t forget anything important.
Plus, as an additional security measure, you are required to add your last year’s adjusted gross income when you are e-filing your tax return. After all, you don’t want to miss anything that will make you regret it later on. The idea is to save as much as you can on taxes.
During Filing
While filing your tax return, above-the-line deductions can reduce your gross income, such as interest, salaries, and wages. Some good examples of these desert directions include the deductions for contributions to IRA, teacher educator expenses, and student loan deductions.
It is also a great idea to check out the most missed credits. A good example of these credits is the earned income tax credit. According to the IRS, every year, around 20% of taxpayers don’t include them.
The worth of the earned income tax credit may be up to $6,660 if you have a family of three kids. If you have a low to moderate level of income, you may be eligible for it. Besides, you can also get valuable tax credits and deductions for your dependents, or other people you support, such as a relative, girlfriend, or boyfriend.
Another smart move you can make to enjoy tax savings is to contribute to your IRA. You can contribute as much as $6,000 or $7,000, especially if you are over 50 years old.
After Filing
After filing your tax return, you may consider contributing a part of your tax refunded amount to your retirement. It is like making a nest egg and preparing for tax savings in 2021.
Another strategy is to revisit your Employee’s Withholding Allowance Certificate (W-4). You can enter your details in the new IRS Form W-4 to ensure your employer receives the right W-4 to get the maximum tax refund.
Also, it’s a good practice to revisit your W-4 annually to ensure it complies with any changes to your situation and changes to tax laws.
Conclusion
In short, if you follow these tax filing tips by Handy, you can save a great deal of money and get the maximum amount of refund. So, make sure you consider these tips before, during or after the tax filing process.