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5 ways to make taxes easier

You work hard for your money. You want to keep more of it. And you want filing your taxes to be less stressful. We hear you.

Read on for 5 tips to make tax season easier — on you and your wallet.

Tip 1: Be an early bird

Most people focus on when the last day is to file their taxes. It’s understandable because, hey, life is busy, and taxes aren’t the most fun. But anxiety can mount the closer you get to April 15 — official Tax Day.

Did you know you can file your individual return as early as the end of January? Do your best to file your return in February or March. Filing early gives you more time. And if you get money back, that should arrive earlier, too.

Tip 2: Get organized

Set aside time to learn the forms you’ll need to fill out and the information needed. The more you learn, the easier it gets.

Gather everything

The information needed to complete your tax return depends on your life situation. Here are 4 categories to keep in mind:

  1. Personal: Every tax filer provides information like Social Security number and birthdate.
  2. Dependent: Parents or caregivers provide information such as childcare records.
  3. Income: Gather documents that show any way you’ve made money, like a W-2 or 1099.
  4. Deductions: Receipts and statements that may help you claim deductions. These could lower the taxes you owe.

Set up a system

Receipts and forms come at us in dozens of ways: printed, emailed, in your Apple Wallet or Venmo account. It’s a lot of breadcrumbs to gather. Develop a system that works for you to keep track of it all.

  • An online spreadsheet to track expenses and deductions as they come in
  • A centralized folder for all digital receipts
  • A physical folder for all hard-copy items
  • A monthly working session where you update everything

De-clutter every 3 years

Keep supporting tax documents for 3 years. After that time, you may shred sensitive financial documents and scrub digital records.

Tip 3: Be AGI savvy

How much you pay in taxes comes down to your annual gross income (AGI). Your AGI is your total income for the tax year minus the adjustments you qualify for. Less taxable income means less income that is taxed. That means more of your hard-earned dollars stay in your account. Added bonus: Sometimes lowering your AGI can put you into a lower tax bracket, too.

7 ways to lower your AGI

  1. Max out your retirement account contributions
  2. Enroll in an employee stock purchasing program
  3. Open or contribute to your Health Savings Account or Flex Savings Account
  4. For teachers, claim educator expenses
  5. For armed forces members, claim moving expenses
  6. Deduct any student loan interest
  7. Sell poor-performing stocks

Tip 4: Play to your strengths

If you love numbers, forms, and rules, doing your own taxes might be right up your alley. But if the thought of paperwork and math makes your skin crawl, you can hire a professional. Also, consider the complexity of your tax situation. If you’re 20 years old, live with your parents, and have a job but few assets, doing your own taxes may be easy. If you run a small business while caring for a multi-generational family, you may want some help.

Play to your strengths and choose the method that brings you the most peace of mind.

Make taxes easier: personal tax software

If you’ve decided to do your own taxes, a wealth of tax preparation software exists to make the process easier. Tax prep software prompts you for information then fills out your tax return. You’ll get an estimate of what you might owe or get refunded.

Software is only as good as the information you feed it, which is why getting organized (tip 2) is so crucial. Dozens of software options exist, so do your research.

Pro tip: If your adjusted gross income is $79,000 or less, you can get your federal tax return prepared and filed for free through an IRS Free File trusted partner.

Hiring a tax professional: what to watch for  

If you decide to hire a tax professional, be sure to check their credentials. You’ll be sharing sensitive information with them. Walk away from any professional who feels shady. Anyone certified to do taxes will have an IRS Preparer Tax Identification Number.

Tip 5: Go digital when filing

To get your taxes into the hands of the U.S. government, filing electronically has its advantages.

Electronically

  • E-file with IRS Free File or through most tax preparation software
  • Secure encryption protects you from ID theft
  • Easy and convenient
  • Faster refund via direct deposit — under 21 days
  • Schedule electronic payments when you file
  • You need a computer and internet access

By mail

  • Print out and mail your 1040 to the address listed, by state
  • Staffing issues mean processing paper tax returns can take up to 4 months

Bonus tip: How to spot an IRS scam

Identity thieves love tax season. Income tax scams abound across email, phone, text, and social media. Know that the IRS’s first contact with a taxpayer is always a mailed letter. If someone calls or texts claiming to be from the IRS, don’t give them any personal information. Then, block them.

Remember, Numerica is here for your financial well-being. Call us at 800.433.1837, or check out our library for more articles aimed at helping you live well.

Here’s the legal stuff: This article is provided for educational purposes only and is not intended to replace the advice of a financial advisor, tax professional, loan representative, or similar professional. The examples provided within the article are for example only and may not apply to your situation. Since every situation is different, we recommend speaking to a professional you trust regarding your specific needs.

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July 13, 2024