April 30 is a foreboding day for many people because that is usually the deadline for filing income taxes.
It doesn’t have to be so ominous or overwhelming, though.
Use these strategies to improve your financial future and reduce your tax day stress by getting an early start on preparing your income taxes.
Consider these tax strategies to plan ahead for tax day:
Start gathering records early
Spend some time gathering your documentation beforehand to have everything you’ll need to file quickly and easily. You’ll want to include your past tax returns also, as they will provide insight as to where you might save money today in comparison to previous years.
Who will complete your return?
Decide on whether you will prepare your own taxes this year or hire a tax professional to help you through the process. Start searching for a suitable tax preparer as early as you can. If you wait until the last minute, the tax professional you prefer will likely be swamped with tax returns from other customers.
- If you’re going to file your own taxes, you can prepare yourself by reading about current tax credits, tax law changes, and deductions in advance.
Consider government resources for help
The Internal Revenue Service website and other authoritative sites for individual states are valuable resources for answering common questions and general tax concerns. These free resources are available for consumers any time, so take advantage of the additional assistance they provide when filing your taxes.
Estimate your taxes
It helps to estimate your taxes ahead of time, so you know what to expect when you file. The IRS has withholding calculators and useful tools to help determine your tax responsibilities before you actually file.
If you end up owing money on your taxes this year, the estimation process will be particularly helpful to help you prepare for the liability.
Make last-minute tax-deductible purchases
If it looks like you’ll owe money this year on your return and you’re self-employed, you can make purchase necessary items for your business before the end of December. These will become extra tax deductions to offset your tax bill.
Contribute as much as possible to tax-deductible retirement funds
This reduces your taxable income, which potentially reduces your tax liability.
Donate cash or items to local charities
You can also make charitable donations before December 31st to receive a tax deduction for this year. Don’t forget to get a receipt for whatever you give.
If you’re expecting a refund, file early
Obviously, the sooner you file, the sooner you’ll receive your tax refund. You can file as early as January if you have all your paperwork together to support your return.
E-file your return
Electronically filing or e-filing your tax return has a number of advantages. Most E-file software computes tax credits and deductions for you based on information you enter into the program. Again, if you’re getting a refund this year, you’ll get it quicker if you e-file rather than mail your return.
The Bottom Line
Getting an early start on filing your taxes is the best way to avoid tax day stress and ease the burden of the process.
It also allows you the opportunity to review and maximize your deductions to get the most tax credit possible without stressing over last-minute details.
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