Its that time of year again! Whenever the topic of taxes comes up it makes people cringe. Everyone knows that taxes are a part of being alive but no one really enjoys paying them. Yet most are compliant since being a rebel will just land you with large fines or jail time. In order to make the best of your hard earned money during tax time, be sure to follow these simple rules and tips to at least keep you in Uncle Sam’s good books but also keep more cash in your pocket.
1. Always be sure you are accurate and keep spotless records. In doing so, you are always a wide open book incase the tax man ever comes knocking. Some people try to hide little things here and there but doing so could end up costing you if you get caught. The government never looks at fraud favorably and trying to skim a little extra for yourself could land you in deep water. To go along with this, if you are using an accountant of professional tax advisor, it doesn’t hurt to check their history. If this person/company has been investigated in the past for some suspicious activity, it may indicate a more likely audit on your paperwork. Also if you are flagged with any fraud or major fines, look forward to a future under the microscope! Go with someone who is not necessarily looking for the highest return unethically, but the best return you can have without raising any alarms.
2. Be sure to indicate on your return or to your tax preparer if there have been any significant changes in your life. Examples would be if you have had another child? Perhaps an older family member has moved in and can be claimed as a dependant. Or perhaps a child has moved away from home. Whatever the case be aware that last years return doesn’t not necessarily have the same info on it regarding issues like these as this years.
3. Not using your 401k to reduce the taxes you owe. Contributing money to your 401k each year will save you money on your taxes. You have heard this before I am sure but many people even when they are in the position to put a few dollars away fail to do so. Even if you can only contribute a fraction of what the maximum allowed is, putting something in it will not only help you save money for your retirement but also put more money back in your pocket when your return comes.
4. If you are donating anything be sure to keep records including their proper value. Charitable gifts have tax breaks but they don’t always have to be in the form of cash donations. There are programs that allow for donating old cars in which you can claim their value on your return. What some people make the mistake of doing is claiming an old car of theirs is worth $2000 where as the blue book value may be $400. Even if you are unintentionally inflating the price, it still could come back to get you. If you are in the position to donate a vehicle, be sure to find its blue book value first and if you feel you have added significant value to it, be sure you have your receipts to back it up.
Yakezie Carnival at Family Money ValuesTaxes