Reduce Your Taxes With Smart Tax Planning
Every year you can be sure that tax season will come around, but smart tax planning will ease unnecessary anxieties.
While many people dread tax preparation, there are ways to reduce your taxes.
What makes the process easier is keeping good records along with receipts that pertain to business expenses.
Individual Tax Return Planning
As an individual taxpayer, you'll need to decide which return to file.
Form 1040 is the most common return for individuals, which includes the 1040A and the 1040EZ.
The 1040A is useful if you have dependents or more extensive deductibles you need to add.
1040EZ is a simplified version for those without dependents.
Increase Your Withholding
If you enjoy getting a larger tax refund, you'll want to make sure you're having the maximum withheld each pay period.
For example, choose zero dependents if your single because the IRS will withhold more than if you choose one or two dependents.
By increasing your withholding, you're less likely to owe taxes.
Contribute More to a Retirement Plan
Another great way to plan ahead is to increase your retirement savings contribution.
If you have a 401(k), increase the amount you contribute to the maximum allowed, if you can afford to do so.
If you don't participate in a 401(k), by doing so now, you can reduce your overall taxes for the year.
Keep Track of Job-Hunting Expenses
If you've been job-hunting, keep track of the expenses, the IRS allows you to deduct mileage relating to job search activities.
By the same token, you can deduct services related to your job search, such as having your resume created.
Giving to Charity
Keep track of your charitable contributions, and always get a receipt.
The items are deductible and can reduce your taxes.
Examples of items that are tax deductible include clothing, cash, and vehicles.
Business Tax Return Planning
If you own your own business, you'll want to take advantage of the various ways you can reduce your taxes.
If you work from your home office all or part of the time, you can deduct the office space, Internet usage, phone service, as well as utilities that relate to your business.
Equipment Business Expenses
Save your receipts for equipment, such as computers, smartphones, printers, and other supplies that you purchase to use for your business.
All of these are tax deductible and will help you when you file your return.
Deducting Expenses for Automobile
If you use your automobile for work, keep track of the mileage as it can be deducted.
It may not seem like a lot, but the more you drive your vehicle for business purposes, the more it will help you when it comes to your taxes.
Hiring a Professional
If you're confused about filing or have questions, it is often in your best interest to seek out the advice of a professional tax accountant.
He or she will be able to guide you through the process, as well as apply applicable deductions.
This will ensure you take out all deductions that apply to your individual or business tax return.