Tips To Reduce Tax Filing Stress
Tax filing deadline is right around the corner for those of in the us. Federal income taxes aren’t due until April 18 this year, but the extra three days aren’t likely to relieve the stress that usually accompanies the annual Tax Day. The months and days leading up to the filing of federal income taxes are a stressful time for more than half of Americans, according to the surveys. The polls found that 56 percent of U.S adults describe the tax-filing process as stressful and 18 percent considered it “extremely” stressful.
Since paying your taxes and dying are two things we cannot avoid in this life journey, no matter what script you wrote for yourself, here are some suggestions from the experts to help make that tax filing happen with a little less nail chewing and swearing.
1. Don’t procrastinate
Resist the temptation to put off dealing with your taxes until the very last minute. If you wait to file until close to the deadline, you may be so rushed that you miss a potential deduction or source of tax savings and you increase your risk of making an error.
2. If you owe the IRS any money, don’t file late
By filing late, you’re subject to late filing penalties that can run up to 25% of your taxes owed. If you’re not ready to file by the April 15th deadline, simply file the IRS form for an extension. That will give you an additional six months to file your return. The catch is that you still have to pay anything you owe by April 15th, to avoid late-pay penalties.
3. If you are tax savvy enough, file your taxes for free
Everyone has the option to prepare their tax return and e-file it for free. If you made $62,000 or less, you can use free tax software offered by the IRS.
4. Don’t panic if you can’t pay what you owe
You can easily set up a payment plan on taxes you owe, as long as your returns are filed up-to-date. For most tax debts, a payment plan, called an IRS Installment Agreement, can be set up online. With an installment agreement, you can easily spread your payments out over a number of years.
5. Don’t stick your head in the sand if you owe back taxes
It is easy to let a tax problem get away from you and ignoring the problem and hoping that it will go away. That only increases the amount you owe and the chances that you’ll be subject to aggressive IRS collections. If you can meet the IRS standard for financial hardship based on your income, living expenses and the assets you own, then you can potentially eliminate a significant portion of your tax debt. Bet you didn’t know that!
6. Claim your deductions!
You owe it to yourself to claim every tax deduction to which you’re entitled. There are many deductions and beneficial tax rules that are available such as moving, travel expenses, childcare and educational costs. If self-employed, there are tons of percentage deductions you can take for rent, utilities, auto, office and phone. FYI…get yourself an accordion monthly file and stick your receipts in there or better yet, if you can figure out how to install the software Quicken Books, even better. Hit a button and there are all your totals for your taxes.
7. Find out what your exclusions are
Excluded items are not subject to tax but may have to be shown on your tax return. Some earnings are exempt from tax.
8. Get help!
There are countless tax organizations that are willing to answer your questions for you and if you feel you cannot do your taxes on your own, come with reasonable rates to do them for you. If you find yourself struggling or clueless, bite the bullet and take your paperwork to a tax expert. Do some price comparison shopping, just like you would with any important purchase.
9. Celebrate when they are done!
Take yourself out to dinner, buy a bottle of wine and watch a great movie, go dancing or whatever it is that is your victory dance! You deserve it!
Susan Z’s Verdict
Regardless of how you choose to get your taxes done and over with, the most important rules to follow in order to have the least amount of tax time stress are being prepared and don’t wait until the last minute. If you get your taxes ready in increments, it will not be so overwhelming when filing time comes due.
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