6 Things to Remember When Filing Your Taxes
Spring is here, the birds are singing and the beach is calling your name. Nothing can get in the way of springtime joy, except realizing your taxes still need to be filed. However, taxes don’t have to be stressful! Follow the simple tips below to simplify the process.
1. Stay Updated
There are constant changes in tax codes and what you can claim as a deductible, exemption or tax credit. Not knowing which of these apply to you can cost you money that could have been coming back to you.
2. Make Sure You’re Selecting the Right Tax Filing Status
There are five tax filing statuses to choose from: single, head of household, married filing jointly, married filing separately and qualified widow or widower. Selecting the correct status is important because it affects your standard deduction and your income tax bracket. Being in a higher income bracket means a higher tax rate on your wages.
3. Don’t Pay Someone to Fill out Paperwork that you can do yourself
Want to take care of the paperwork quickly and easily? File online and have your refund deposited directly into your credit union account if you qualify. The IRS says it will issue most refunds within 21 days, but many filers receive federal refunds within 10 days to two weeks. If you don’t qualify for a refund, at least you saved yourself the cost of paying a tax preparer to do paperwork that you can easily do yourself. Learn more about TurboTax at sdccu.com/turbotax
4. Use Tax Credits to Your Advantage
Tax credits reduce your tax liability dollar to dollar, rather than just reducing your taxable income. This means tax credits are a more powerful tool than deductions, but they are also harder to qualify for.
5. File on Time or Even Early
April 15, 2019—Federal tax returns are due. If you can, you should file as soon as you get all of your tax documents. This will streamline the process for you, and if you qualify for a return, your return will arrive quicker.
6. Save for Retirement if you do get a Refund
Contribute to an IRA and enjoy the benefits of a tax deduction of up to $6,000 ($7,000 if you are 50 or older). This is up from the 2018 limits of $5,500 and $6,500. Contributions may be tax-deductible in the year they are made, withdrawals in retirement are taxed as normal income so plan ahead.
Consult your tax advisor.