Avoid the Tax-Time Blues by Saving Green
Tax time doesn't have to bring on the blues. Think about all the green you could be saving, yes, saving. Follow these steps from Turbo Tax to put more money back in your pocket.
Organize Your Records
Good organization may not cut your taxes but it can help you save money in the long-term. Keep all the information that comes in the mail in January, such as W-2s, 1099s, and mortgage interest statements.
Collect receipts and information that you have accumulated during the year.
Enter the amounts from all these documents into a computer program like Quicken or total them by hand and give the list to your tax preparer.
Make sure you know the price you paid for any stocks or funds you have sold. Know the details on income from rental properties.
You could save $300 to $400 with your tax preparer plus plenty of your time. In the event of an audit, you could save on assessments and penalties because you'll have all your back-up on hand.
Find the Right Forms
The library won't always have all the forms you need. Go online to view and download a large catalog of forms and publications at the Internal Revenue Service's Web site, www.irs.gov, or call 1-800-829-3676 to have them sent to you by mail.
Need a state form or publications? Visit www.taxadmin.org/fta/link/forms.html.
It's easier to take the standard deduction, but you may save a bundle if you itemize, especially if you are self-employed, own a home or live in a high-tax area.
Contribute to Retirement Accounts
If you haven't already funded your retirement account, do so by April 15. That's the deadline for any kind of IRA, deductible or not. If you have a Keogh or SEP, though, and you get an extension, you can wait until your extension deadline to put money into those accounts.
Consider a Home-Office Deduction
In the past, many taxpayers have avoided the home-office deduction because it has been regarded as a red flag for an audit. If you legitimately qualify for the deduction, however, there should be no problem. Check with your tax advisor. You could save thousands of dollars.
Provide Dependent Taxpayer IDs on Your Return
Be sure to include the Taxpayer Identification Numbers (tax lingo for social security numbers) for your children and other dependents. Otherwise, the IRS can deny the personal exemption for each dependent and the child tax credit for each child under age 17
After you have a baby, be sure to file for a social security card right away so that you have the number at tax time.
You could save hundreds or thousands of dollars, depending on the number of dependents and your income.
Pay on Time
Pay on time and you can avoid interest and penalties. The IRS doesn't really care when you file, as long as you request an extension using Form 4868.
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