Tax Time Tips
'Tis the season to file taxes... Fa la la la la la la la la In lieu of tax season, I decided to give you a little advice on how to prepare for filing and when you get your refund. So if you didn't know tax season actually starts the day you get your last check stub for that year. For example, if you got paid on December 30, you can technically walk in a tax office with your last check stub and file. However, the IRS won't accept it until the official filing day which was January 23rd. The last day to file without accruing any late penalties is April 17, 2017.
So for those who haven't filed or are wondering what you need to do here are some tips:
- Organization is key! Gather your pay stubs, bank statements (personal and business), health insurance information, child(ren) records and W2 documents (also your 1099 forms).
- Keep track of everything, especially if you are an entrepreneur. This means all expenses, deposits and purchases throughout the year. You can log this in google docs, excel, or by hand. And keep your receipts!!! This is very important for write off purposes:)
- Get a tax professional. This is very important especially for those who are new to filing taxes. I don't recommend doing taxes on our own because there are just some things that you may not know or you might misunderstand which will cause you more harm than good. There is nothing wrong with walking into a tax office and interviewing the person who will be handling your taxes. As a tax professional, I like to get to know my clients and build a relationship with them so they trust me with not just filing their taxes.
- GIVE! Did you know that by making donations to a charity every year will lower your tax deductible income??? This means you will owe less in taxes which in turn can mean a higher refund or that you won't owe as much.
For those of you that have filed what are you going to do with the money you plan on getting back? Here are some ideas on using that extra money wisely:
- SAVE! If you don't already have a savings account this should be the year to start one. According to financial advisors, you should have at least three to six months of your monthly income saved. So if you make $500/month you should have anywhere from $1500 - $3000 saved. You could also start an emergency fund and put $1000 in it.
- Pay off your debt. Credit is very important and so is your debt-to-income ratio (your debt-to-income ratio is your monthly bills divided by your monthly income) Start paying off accounts on your credit using the snowball effect. If you have credit cards with high balances that would be the great place to start.
- Purchase what you need vs what you want. Period!
- INVEST!!! You can invest in your home, your business or even in a vacation that you haven't been able to afford.
Hope this post helps you this tax season!