Tips for a stress-less tax season
As with many things in life, the stressful part of doing taxes isn't doing what you know you should be doing, but wondering what you should be doing that you don't know about. At LifePlan, we're all about helping you figure out the best solutions for your life and your situation, so we've compiled a list of tips and lookouts to help take some stress out of your tax prep.
1) Early filers get early refunds
If removing the dark cloud of filing your taxes from your horizon isn't enough incentive to get 'em done, think of this: the earlier you file, the sooner you get your refund and the sooner you can get your refund earning interest for you in a high-yield savings account or other investment vehicle. Filing early also reduces the opportunity for identity thieves to file for you and collect your refund in your place. Check out the rest of our tips to make sure you're not leaving money on the table.
2) Use last year's tax return for your checklist.
When confronted with an empty tax form and a list of potential forms and deductions do you ever get the feeling of tax déjà vu? Guess what, if you filed taxes last year (and we hope you did) you've got a ready-made check list - it's your return. Use it to check your work, then ask yourself what was different this year that you may still need to account for.
3) This money won't wait for a rainy day. Get it back while you can.
If you contributed money pre-tax to FSAs (federal savings accounts), you need to make sure you take it out before you lose it. Check the guidelines for your accounts and make sure you submit the appropriate receipts before the 2019 withdrawal deadline for your account.
4) A little research and a little math can pay off.
The standard individual deduction for 2019 is $12,200, $18,350 for heads of household, and $24,000 for married couples filing jointly. If you think your deductions add up to more than the standard deduction for your status, the extra work of itemizing your deductions is likely to pay you back in a bigger refund.
5) If you are itemizing, double check and dig a little deeper.
A little extra legwork can help you make sure you're claiming every possible expenditure.
- Ask your childcare provider for a full-year invoice to make sure your calculations match.
- For all charitable gifts you'll need an annual giving statement or letter.
- Reach out to your loan-holders if you haven't received the following forms:
- Mortgage interest, 1098
- student loan interest paid over $600, 1098-E
- Tuition and education, 1098-T
- Property tax owed, property tax statement
A few more places to find deductions you may have overlooked – be sure to look into the specifics of each of these deductions before claiming any: state sales tax, reinvested dividends, smaller charitable donations, state income tax paid on last year's return, jury duty fees you had to return to your employer, and a percentage of miles driven for medical expenses or volunteering for charity.
6) What's your status? Are you sure about that?
Even if you think you're pretty clear on where you are in life, it's not a bad idea to give your filing status some thought. Especially in the categories of married filing jointly and married filing separately, understanding the nuances of different status designations can work in your favor.
Life changes such as divorce or death, as well as lifestyle choices (think differences in spending habits between you and your spouse), can impact which status is best for you. Head of household is another status, that in the right circumstances, can make a big difference on your tax return.
7) Is there a tax credit with your name on it? Find out.
Many people aren't aware of special tax credits that can significantly reduce their tax liability. If you fall into any of these categories look into these tax credits.
- Working families with low and moderate income could be eligible for the Earned Income Tax Credit (EITC)
- Other credits for families with kids include the Child and Dependent Care Credit
- College students and those supporting children in college may be eligible for the American Opportunity Credit or Lifetime Learning Credit.
- Homeowners who've made property upgrades could also be eligible for energy-saving home-improvement credits.
- If you bought an electric car in 2019 look into the credit for electric vehicles
8) Start keeping your records and returns online.
The IRS says you need to save tax returns and records for three years after the date you filed them. Wouldn't it be nice to get rid of that banker box full of receipts and old tax returns taking up space and attracting silverfish in your office? With smartphone apps and many forms available digitally, storing receipts and records has never been easier. Start now, and in three years, the banker's box won't just be a thing of the past, it will be a thing of your past.
PLUS: Your LifePlan account includes unlimited online storage, which makes it the perfect place to put your new digital repository. You can find your storage in your LifePlan account under MY ACCOUNT>My Files.