Taxes. If you’re like most, you’re not a big fan of this five-letter word. While it’s true that income tax preparation can be frustrating and complicated, knowing these basics can save you money, time, and stress.
Understand Taxable Income
The amount of taxes you pay is based on your taxable income rather than your total income. Reducing taxable income means you pay less come filling time.
Don’t Miss Any Tax Deductions
Because deductions reduce your taxable income, make sure you know the ones you’re eligible for. Common deductions include giving, healthcare expenses, and the interest you pay on your mortgage.
Take Advantage of Tax Credits
Credits are a big deal because they reduce your tax bill dollar for dollar, rather than just reducing your taxable income. Find a good tax pro in your area to help you take advantage of every possible credit like child care or small business expenses.
Pay Attention to Your Withholdings
Withholdings are a percentage of your paycheck your employer sets aside to cover your taxes. We recommend adjusting your withholdings so you break even. You won’t get a big refund from the IRS but you won’t send them a huge check.
Determine If You Need a Pro
It doesn’t take much for taxes to become too complicated for the average person. If your situation is simple, you may be able to handle it on your own. Keep in mind pros can find deductions and credits you might have missed.
My go-to app is TurboTax because I can do my taxes on my own while getting help from the pros. It means a lot to me to do it on my own terms and time. It is almost impossible to find time to go to a pro while working and taking care of a family, so for me, TurboTax is the way to go.