It’s that time of year again – tax season! But don’t fret just yet, we at Ebates have compiled some awesome tax saving tips to help you with both saving a little extra on filing your taxes this year and maximizing your refund. Whether you are looking forward to a refund or expecting to send the IRS a check, these tax saving tips will help you get the job done on time, hopefully under-budget and maybe even with some extra refund money in your pocket when April rolls around.
1. Take advantage of the simple tax return freebies. Millions of Americans only ever need to file a simple tax return (1040 EZ or 1040A) but they end up overpaying someone else to do it or fail to take advantage the numerous tax filing freebies available. Many of the popular tax prep companies will offer free use of their services if you are only filing a simple federal or state return, so make sure you check out those options first to save yourself some extra cash when it comes to filing!
2. Need to file a complex tax return? Shop around! There are a lot of choices out there when it comes to picking tax preparation services and software, but don’t let the abundance of options make your head spin. If your return is more complicated, prices can add up quickly so it’s crucial to shop around before making a selection. First, establish what you’re likely to need this tax season by referring to your last year’s tax return. Next, start to compare prices across tax prep providers to score a deal on the software that best suits your tax profile. Make sure the service you choose covers your necessary federal and state filing forms. Lastly, don’t forget to keep an eye out for state and federal tax preparation bundles to maximize your filing service savings!
3. Deductions, deductions, deductions. Don’t forget about deductions! When it comes to filing your taxes, taking proper advantage of deductions can add up to some serious savings. Deductions can lower your total tax bill and could mean bigger, juicier tax refunds in April. If you have a job that requires you to purchase special equipment or apparel out of your own pocket, those professional expenses could be deductible. Don’t forget that you can deduct for charitable donations too, including the value of any goods you’ve donated to Goodwill or other charities. No matter which tax prep software or service you go with, double-check that you benefit from all possible other miscellaneous deductions, like childcare related expenses and healthcare premiums.
4. Boost your tax refunds with credits. Did you know that credits are even better than deductions when it comes to turning your refund into Christmas in April? There are credits available for everything from daycare expenses for your dependents, their enrollment in college and even some home improvements. Become familiar with the credits that your family qualifies for because those credits can really add up to an awesome refund year after year.
5. Keep your tax prep software and guides up to date. One of the most basic tax saving tips may seem obvious, but keeping your tax prep materials updated can mean even bigger savings on your taxes or larger tax refunds. Using the latest versions of tax prep software ensures that you are taking advantage of the current tax law, including all of the latest deductions and credits that may be available to you. Keep an eye out for updates that might include new credits or deductions for things like energy efficiency updates to your home or a new hybrid vehicle that can save you big money on your taxes. Pay attention to changes in credits and deductions as losing or gaining either one could have a major impact on your family’s budget. Using a tax preparation program such as TurboTax or TaxAct should automatically apply these updates, but double check that your software is the 2016 version. Better safe, and maybe a little richer, than sorry!
6. Timing is everything. When it comes to filing your taxes, early is best for a number of money-related reasons. First, filing your taxes early usually means you will get your refund earlier. Beat the April filing rush, get your refund processed early and all your friends will wonder when you became such a tax whiz. Second, preparing your taxes early is your best bet to avoid a nasty surprise in case you do actually owe the IRS a large chunk of money. Better to discover that bill early rather than the night before taxes are due! Plus, if you figure out how much you owe, you can ask the IRS for an installment payment plan to pay off your bill. Moral of the story? Start early! Regardless of whether you think you might owe taxes or if you are expecting a hefty refund, starting early on filing your taxes is well worth your time. Once you’ve finished filing, you can go back to binge-watching TV guilt-free because you don’t have to worry about your taxes again until 2017!
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