Five Tips to Keep You Sane During Tax Season
“I love doing my taxes! They are so simple, and I always get money back!” If this is you, no need to read on, you seem to be doing just fine. However, if you are the other 99% of the population, this article should be of great help to you.
Tax season is frustrating for most. Especially if you held multiple jobs, had independent contractor positions, or pay out-of-pocket for most-to-all of your required work equipment during the year. Tracking down receipts and calling old jobs for tax forms you have not received yet is not a fun task. Here are a five simple tips to help you power through tax season without getting as many gray hairs as last year:
1. Keep it simple, and E-File – Although many people are rightfully concerned about identity theft and prefer to never give out any financial or personal information over the Internet, e-filing is truly the best & quickest way to get your refund or take care of taxes you may owe. Also, this is the more eco-friendly approach considering it is completely paperless. You can even avoid having a paper check sent by directly depositing funds into your account, or paying any taxes you owe with your debit card.
2. Hiring an accountant can actually save you money – Let’s face it. We are all experts in our own field, and tax experts will do a far superior job on a complicated tax return. They are the most up-to-date on new tax laws and can complete your refund quickly. Although there will obviously be a fee involved, it is often canceled out by deductions the accountant finds for you due to their extensive knowledge on the proper procedures. And, you can breathe easy, knowing an audit will not be in your future due to silly, uninformed mistakes.
3. Refrain from getting a “Rapid Refund” – Rapid refunds are often offered when someone is preparing your taxes. What is often not clearly stated, is that a “rapid refund” is actually more like a loan. Although you get the money more quickly, it typically comes with an astronomical interest rate that could cost you way more than it is worth if you don’t pay it back quickly.
4. Utilize Smart Phone Apps to help you get organized – Many people have smart phones these days, and the app craze has moved into the tax market. ShoeBoxed is a great app that allows you to take photos of all of your receipts and index them. Keep in mind, the app carries a subscription fee, but if you need to itemize and keep track of many receipts, the app will be well worth any fees. TaxCaster is another great app that can help you estimate your refund. Other notable apps to check out include IRS2Go (check the status of your refund), Tax Central (bone up on tax laws and estimate your return/payment) and Turbo Tax SnapTax (file your taxes directly from your phone).
5. Prepare for taxes you owe for Independent Contractor/1099 positions – Oh, the dreaded 1099 job. They seem great when you’re getting a full paycheck without any tax deductions, but when tax season comes you could be in for an expensive surprise. Depending on how much you make, most experts advise setting aside anywhere from 15-25% of your pay to take care of your taxes. Also, it might come as a surprise that you are responsible for making quarterly payments. Waiting until tax season will mean that you accrue interest and penalties on any outstanding taxes that are assessed on a quarterly basis.
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