Brought to you by Taxfyle:
Taxes can be a little overwhelming, especially if you’ve only had to do them a few times so far. Moreover, if you attempt to do your personal taxes yourself, things tend to get even a little more complicated.
That said, unless you love math or are extremely familiar with tax filing software, you stand a better chance when you work with a professional tax service or company.
Regardless of which path you decide on, there are still a few things you need to know before you tackle your taxes.
The Tax Deadline
This may seem obvious, but one of the things you absolutely need to know to do your taxes is the tax deadline. Typically, unless there are extenuating circumstances or an ongoing pandemic, the tax deadline for your personal taxes is April 15th.
It’s important to meet this deadline because there are late filing fees and consequences when you miss it. That said, if you think you’re going to miss your deadline of April 15th, then have your tax professional file an extension or discuss other options available to you.
Your Tax Filing Status
To properly file your taxes, you need to know what your filing status is. Your filing status matters because it helps you determine which tax bracket you fall into, how much you’ll likely owe, and what kinds of tax benefits or deductions are available to you.
If you’d like a rough estimate of this year’s tax liabilities, then go to https://taxfyle.com/income-tax-return-calculator/ for more information.
Which Tax Deductions Can You Claim?
You should also be aware of which tax deductions you can claim. Common deductions that people take include medical expenses that exceed 10% of your adjusted gross income, educational expenses, charitable donations, self-employment business expenses, and contributions to your tax-deferred retirement accounts.
This isn’t an exhaustive list of the available deductions, so you may want to consider either doing a little research to complete your personal taxes or hire a professional to look over it.
How to Save Yourself Even More Money
Finally, if you’re looking for more ways to save money this tax year, then you should consider making additional contributions to your IRA and possible health savings account if you have one.
The nice thing about making extra contributions to either of these two accounts is that you can still make 2020 contributions all the way up until April 15th, 2021. This helps you save money because it provides you a way to reduce your taxable income, which in turn, can put you in a lower tax bracket.
That said, both of these accounts have maximum contributions per year, so if you’ve already exhausted your contributions for the year, you may have to wait. Also, if you plan to go this route, make sure that the contributions you make are applied to the previous year, so you can claim the tax break now.