Yesterday was the first day in 2013 to e-file your taxes, so we thought today would be an appropriate day to offer some tax tips from personal finance writer Daisy Chan.
Do Your Prep Work ASAP
The first step is taking the time to gather the paperwork that you’ll need for filing your return. Necessary paperwork includes your W-2 from your employer (or 1099 forms if you’re self-employed), year-end statements from your bank or credit union and anywhere else you have investments, and receipts for things you’re planning to claim as deductions. If you’re missing any important documentation, take the time to find it. Having your papers in order makes you less likely to procrastinate and miss the deadline, which could cost you 25% or more in penalties on taxes owed, says Mark Luscombe, principal analyst at tax research firm CCH.
Research Deductions
There are actually quite a few ways to shave money off your tax bill without breaking the law. If someone else takes care of your kids while you’re at work or if you made improvements to your home to save on energy bills you can deduct a portion of those expenses on your taxes. To find out about more tax breaks that might apply to you check out IRS Publication 17 at IRS.gov.
Skip the Paper Tax Forms
Don’t assume doing your taxes is easy! Instead of getting paper forms and doing everything yourself, invest in a good tax software package like TurboTax and or Tax Cut that will fill out the necessary forms automatically after asking you a series of questions. At prices from around $20 to $75 these products are cheaper than hiring an accountant. Also, because your taxes can be filed electronically you can get your refund in as little as 10 days. (Keep in mind that there’s an additional charge for e-filing your state taxes).
Seek Free Help
Check with the universities, libraries and community centers in your area to see if any hold volunteer events where accounting students and tax preparers help fill out tax returns free of charge. If your income is $57,000 or less, the IRS offers free electronic filing through its Free File service (IRS.gov/FreeFile). Those with income of $50,000 or less can use the IRS’s Volunteer Income Tax Assistance Program, which offers free tax filing by volunteers at community centers, libraries and shopping malls across the country (call 800-906-9887 to find the center nearest you). And for those 60 or older, AARP offers Tax-Aide through the IRS’s Tax Counseling for the Elderly Program; call 888-227-7669.
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