Pay Less in Taxes

When you sit down to do your taxes, it can sometimes feel like you’re staring down at forms written in a foreign language. And, while taxes and tax law can be a bit complex, making the most out of them isn’t quite as hard as you might think.

The simplest way to have your taxes work in your favor is to know what deductions and credits are available and then to take every single one that you can. The more deductions and credits you have, the more money you’ll save, plain and simple.

Thinking along those lines, we’ve provided some useful tips that can help you to actually pay less in taxes this year and maybe even get something back!

Tip #1: Reduce Your Taxes with Retirement Account Contributions

One of the simplest and most beneficial ways to reduce your taxes is through contributions to your retirement account. With almost all of your retirement accounts, other than the Roth IRA, you’ll be able to deduct any amount you put into your fund from your taxes, giving you a lower taxable income, and thus, lower taxes. As an added bonus, the money you put into these accounts will only grow until you retire, and you won’t have to pay taxes on it as it does.

Tip #2: Mix Business and Pleasure

First of well, we want to make it very clear that we’re not talking about being dishonest when we advise you to mix business with pleasure. We’re not saying take a trip to the Bahamas and write it off as a “business expense;” that’s pretty much a surefire way to get audited. However, if you do want to take a business trip and add some fun into the mix, there’s nothing wrong with that! You’ll be able to deduct some things, like your travel, as a business expense, and that will help to legally make your trip cheaper overall.

Tip #3: Take Advantage of Being Self-Employed

This final tip is just for those who are self-employed, either full-time or part-time. If that’s you, know that there are a TON of deductions for the self-employed, and you need to take advantage of as many of them as you can. There are deductions for your gas when you travel for business, for advertising costs, for your website fee, for your membership to professional organizations, and so much more. If you’re not self-employed, those awesome deductions are probably enough to make you consider it, huh?

As you can see, there are lots of ways to cut corners and save money on your taxes without breaking the law.

The trick is really just to know what money-saving opportunities are available to you and then to take them! If you’re not sure how best to maximize your money, then working with a financial advisor can make a world of difference for you.

Related articles

• End of Year Tax Tips from Our Experts (turbotax.intuit.com)

Where Do Your Tax Dollars Go?

When you pay taxes, they go to pay for a lot of state and federal ventures. And, unfortunately, you don’t really get too much of a say in how those tax dollars are spent. In many cases, you’ll never even know.

Of course, that’s not true for all departments. Some are actually quite open about what they’re doing with your dollars. Case in point: The United States Department of Defense, which posts all of its major contracts on its website.

Just last month, the Department of Defense received over $31 billion, and we think you’d be interested to hear about some of the things it did with your hard-earned money.  

Air Force Testing Projects

Around $15 million went to two defense contractors: Leidos Holdings and Ball Corp. Their plans, collectively, are to spend money doing complex testing involving lasers and other high-tech tools to create better defenses and weapons for our air force.

An Aircraft Carrier

Another defense contractor, Huntington Ingalls, received over $4 billion to create a new nuclear aircraft carrier. That carrier will be called the USS John F. Kennedy and is expected to be completed within the next decade. And, if you think that’s expensive, one like it has already been designed, and two more are expected to follow.

Replenishment Pharmaceuticals

The largest amount of money the Department of Defense has given as of late is a whopping $6.1 billion, awarded to McKesson. This company is going to be providing replenishment pharmaceuticals to the Tricare Pharmacy, which provides medications to people in the service, people who are retired from it, and their dependents.

So, as you can see, your tax dollars are put to use. Whether you think it’s good use or not doesn’t really matter. The fact remains that you have to pay taxes. To make sure that you still have money left over to spend on things you believe in, hire the right accountant!

Tax Tips for the Younger Generation

When you’re in your twenties, filing your taxes can seem like something you only have to do later. In truth, however, it’s really never too early to start filing and to start filing smartly for the future.

Know How Your Parents are Filing                        

First things first, you need to check in with your parents and see how they’re treating you. Whether they’re claiming you as a dependent or not claiming you at all, you need to know what the plan is. How they claim you will make a difference in how you should file, in what amounts, and various other factors.

Take Advantage of Free Filing

Filing online is the quickest and easiest way to get the return to which you are entitled. Making online filing even better, you can do it 100% for free if you take advantage of the IRS’ free software offer for those who earn below $60,000 per year. This software can walk you through how to handle your tax forms in just a few basic steps.

Deduct Mortgage Interest

Have you recently purchased a home? That’s not at all uncommon for people in their 20s. If you’ve made this common “20 something” purchase, find out if, in your case, your mortgage interest is tax-deductible- it often is. Even if it’s not, you may be able to take advantage of other homeowner-only credits, so check with the IRS and/or your accountant to learn what benefits you can earn just by being a homeowner.

Filing your taxes can be tricky. As a young person, there’s a lot to think about. But, if you can follow these simple tips and get help from a seasoned professional, there’s no reason that tax time can’t go well (and smoothly!) for you.

Info Regarding Taxes and Time Abroad

If you’re traveling, it can be all too easy to toss tax concerns to the side.

However, even though you can leave, you can’t leave your taxes behind. No matter where you go, why, or for how long, there are still taxes to be paid.

Do it Yourself and Don’t Lie                     

As an American, tracking taxes is easy. Via a variety of Smartphone apps, spreadsheets, and other technological tools, people are able to keep track of their finances. However, in other countries, the tracking methods commonly utilized in the United States may not be so easily available. When that is the case, you either have to keep track of everything by hand, or to rely on the sometimes-faulty banking methods in the country you are currently in.

If you do decide to place your funds in foreign accounts, either temporarily or long-term, do make sure it’s with a legitimate bank and that you have clear plans in place for reporting these amounts when you get back to the States. Regardless of what you may think, Swiss accounts and other foreign accounts aren’t secret and should be thoroughly and fairly reported to avoid trouble.

Don’t Forget to File

Remember, the money you make and spend abroad isn’t some huge secret. If you want to avoid trouble, questions, and a possible audit, be honest in all of your financial dealings.

The temptation to lie or embellish might be great, but remember, you can always be found out.

The bottom line is, while abroad, the tax laws still count. So, no matter why you’re abroad, be sure to observe, follow, and obey the tax laws within your given state.

Related articles

• Video: How to Find Tax Laws (turbotax.intuit.com)

What to do About Windfalls

Anytime you receive a sudden and unexpected inflow of cash, you probably count yourself lucky If you’re the adventurous type, you might immediately use the money to go on a spending spree, or, if you’re the thrifty sort, you might stash the money in savings.

What you need to realize, however, is that no matter how you came about the money or what you plan to do with it, an unexpected windfall is still just plain money and needs to be treated accordingly.

Treat it As Income                  

In the vast majority of cases, any money, whether you win it on a game show or inherit it form a relative, still counts as income. As such, it needs to be reflected as income when you file your taxes. If you don’t count it and it later gets found, you could end up paying more in penalties and/or back taxes than it’s actually worth, so act accordingly. If you’re not sure whether or not your newfound money counts as income, check with an accountant, ideally before you spend any of it.

See if it Changes Your Income Bracket

If a windfall is particularly large, or, if it happens to come right when you’re at the edge of a bracket, it does have the potential to change where you lie in terms of your income bracket.

If you are bumped to a new bracket, this could mean a domino effect, i.e. a lot of changes in how and what you file. If you are aware that your income bracket has changed due to a windfall or if you think that may be the case, there’s no better time to check in with an accountant and see what this means for your taxes this year, or, in the case of very large and longstanding windfalls, for the future.

The thing to take away from all of this is that a windfall needs to be treated exactly the same way you would treat any money you earned because essentially, that’s what it is. Ask an accountant if you have questions; if you can do that and handle your windfall appropriately in general, it can be the blessing you always hoped for, rather than a surprise curse.

The Biggest Tax Blunders

Most people will make mistakes on their taxes at one point or another. However, some mistakes are more common and, in some cases, more detrimental than others.

Obviously, you should aim not to make any mistakes whatsoever when you file your tax returns. But, at the very least, you should aim not to make any of the most common and most easily avoidable tax mistakes.

Filing Late

Perhaps the most common tax offense is waiting too late to file. The tax deadline each year is April 15; at that point, you absolutely need to have your taxes sent in and done with. Find a way to stick that date in your mind, and then don’t forget it.

However, instead of just aiming to file by or on April 15, do your best to file even earlier than the cut-off. You’ll likely get your refund a lot sooner if you do and if you are entitled to one, of course. Plus, employers usually send out W-2s and 1099s right at the start of the new year, so there’s really no reason not to file as soon as you receive them.

Failing to Make Necessary Updates

When you go through a major life change, such as a marriage or the birth of a child, there’s a pretty good chance that your filing status is going to need a change too. If you fail to make a necessary filing status change, you could end up paying too much or too little in taxes. Either scenario is bad.

If you don’t really understand the whole filing status thing, whether or not you need to make a

change, or how a necessary change is going to affect you and how you can limit any negative effects, remember that you can always ask an accountant for advice.

Forgetting to File Certain Forms

Remembering to file more common and basic forms, such as your W-2 for your main job, is usually pretty easy. However, if you’re doing side work that requires a 1099 or have some kind of new or unusual-for-you form to file, it’s easy to forget all about it or to put it off until it’s too late. Don’t make that mistake. Find out early on all the forms that are needed for you for the tax year- an accountant can really help with figuring that out- and then get on it!

In fact, “get on” all of your required tax-related tasks. The sooner you start getting things together, the less likely it is that you’ll end up making a serious and potentially costly mistake.

Related articles

• How to Obtain a Copy of Your Tax Return (turbotax.intuit.com)

What to do About a Fraudulent Tax Return

Tax fraud is a serious problem, and unfortunately, it’s on the rise. In recent years, there has been an increase in criminals using stolen personal information to file fraudulent tax returns and then to

pocket the refunds.

You might think this could never happen to you, but the truth is, cyber thieves are always coming up with new ways to steal your information and to use it to their own devious benefit. Fortunately, there are many things you can do to reduce your risk of being a victim of tax fraud, such as:

l  Keeping high quality, up-to-date anti-virus software on your computer

l  If filing online, only filing from a secure connection, i.e. not via public WiFi

l  Never filing from or responding to emails supposedly from the IRS, which doesn’t send emails

l  Sending mailed returns from the post office directly, where they are less likely to be subjected to interference

l  Storing personal data in a secure location

l  Not carrying your social security card in your wallet, in case it gets stolen

l  Regularly checking your bank account and credit card statements and reporting or inquiring about suspicious activity

Take Action Immediately

If you do fall victim to a fraudulent return or even if you merely think this may be the case, act immediately! Let your bank, your credit card issuer, and others know so that new accounts can be opened and so that the thief can’t continue to use your information.

Also be sure to contact the IRS and let them know what is going on so that you can file a new return and undo any damage done to your credit. In fact, it is also worthwhile to contact credit reporting agencies, including Experian, TransUnion, and Equifax. You can also access your credit report for free from these agencies and request that information related to the fraud be removed.

Request an Identity Protection PIN

Once you’ve been the victim of fraud, the last thing you’ll want is for it to happen again. That’s why it’s wise to file for an identity protection PIN from the IRS. This number, issued by the IRS, can be used to securely file future returns, putting an additional safety net between you and potential fraud. This is a very necessary step because, unfortunately, if you’ve been victimized once, it’s likely to happen again since your information is out there and accessible.

Move On

Finally, remember that you can’t live in fear forever. It’s normal to feel scared and frustrated after something like this happens to you. But, as long as you take the appropriate steps, you can limit your risk of having fraud affect you in the future, learn from the experience, and move on, all the wiser for what you’ve been through.

Unfortunately, though, even if you follow all of these tips to a tee, there is no absolute guarantee you won’t be a victim of a fraudulent return. That’s why, in addition to these measures, you should also be aware of what to do if this does happen to you.

Don't Forgets Tax Advice

Thanks in large part to the internet, tips about what to do on your taxes and in financial matters are everywhere. Unfortunately, though, nobody ever tells you what not to do. Fortunately, we’re stepping up to the plate with some helpful advice on what you shouldn’t do.

Don’t Forget to Track Your Charitable Contributions                 

You do a good deed, like donating money or clothing to a charity, and you get a reward come tax-time. Simple, right? In reality though, charitable contributions and getting deductions for them is a little more complicated than that.

You absolutely need to be keeping careful, provable track of all of your contributions. If you make a donation, whether it’s in the form of cash or goods, ask for a receipt. Also make sure that you are only donating to legitimate organizations so that your donations are actually deduction-worthy.

Don’t Forget to Include Your State Refunds

If you received a state refund in any amount last year, then you need to include it as part of your income. This rule holds true only for state refunds; federal refunds need not be included.

The IRS knows if it paid you a state refund and, if so, how much. Thus, it’s very easy for it to tell if you neglect to include it in your income...and to penalize you for it. Neglecting to add this income in could even increase your chances of getting audited. Don’t make this common but potentially costly mistake.

Don’t Inflate Deductions

The temptation to be a little dishonest is very strong during tax time. For example, you might inflate the amount you supposedly donated to an organization, or you might claim your home office space is a little larger than it is to receive a larger deduction.

Those little lies don’t seem like a big deal if you don’t get caught, but remember, you’re playing a risky game by fibbing. Even little lies can discredit you, cause you to have to pay penalties, open you up to an audit, and even cause you legal trouble.

Resist the temptation to lie...even a little.

As any accountant can tell you, these aren’t the only things you shouldn’t do on your taxes. But, it’s a pretty good list to start with. In general, as long as you are honest and thorough at tax time, you should be okay.

What Your CPA Wishes (S)he Could Tell You

Have you thanked your accountant lately? If not, then you probably should. These professionals have to put up with a lot and, more often than not, get absolutely overwhelmed during tax time with fixing their clients’ mistakes.

Undoubtedly, every accountant wishes, at one time or another, he could call out clients on their mistakes, but most are too polite and just grin and bear it. However, if your accountant could give you some 100% honest advice, we have a pretty good idea of what he’d say...

Don’t Ask for Help at the Last Minute                                                    

If you have some sort of tax or financial problem, such as not having kept good track of your charitable donations or 401(k) contributions, you’re probably aware of it. If you’re not sure of your weak spots or of any of the details related to your finances, that’s a whole other problem in itself.

The thing is, though, if you’re aware of problems or potential problems, bring them up to your accountant as soon as you notice them. Absolutely do not wait until the very last minute, i.e. the height of tax season, to bring up issues to your accountant.

Why? Well, first off, it’s rude! Your accountant is super busy during this time of year and doesn’t need to be swamped by your last minute requests. Secondly, if you’re fortunate enough to have a kind accountant who is willing to offer you last-minute help, it’s probably going to be rushed and not offer you the best possible outcome. If you want tax time to go well for you, make it go well for your accountant by never waiting until the last minute to bring up problems or concerns.

Turn in All Requested Forms and Information on Time

There’s a reason your accountant gives you tight and specific deadlines for when to have what information to him. That reason is so that he can give your taxes his full attention and so that everything gets to the IRS on time.

If you force your accountant to chase you down for forms and information, there’s a good chance that your taxes could be filed late and that you could incur penalties...and that will be your fault, not your accountant’s.

Remember, this professional is working on your behalf, and whatever he asks of you is in your best interest, so do it and do it on time!

Don’t Play the Blame Game

Finally don’t blame your accountant for things that are out of his control and that, more often than not, are your fault, not his.

If you lose out on potential credits because you didn’t keep careful enough records, for example, don’t yell at or fire your accountant when he tells you there’s nothing he can do.

That’s not to say that all accountants are perfect or that they don’t make mistakes. Some do. But, as long as you’ve chosen your accountant carefully and are working with someone who knows his stuff, there’s no reason you shouldn’t do what is asked of you and give a little credit (and thanks!) where credit is due.

How and Why to Get a Jump Start on Your Taxes

Tax time has already come and gone, but, before you know it, it will be here again! Don’t make the mistake of not thinking about your taxes until the last minute. All that’s going to do is cause you stress and worry.

Instead, get a jump start on your taxes now, while you still have time, and it will be smooth sailing come April, guaranteed.

Find a Strategy that Works for You and Start Using It

All throughout the year, you’re going to need to keep track of financial information, such as spending, amounts you’ve socked away in savings, investments, deductions, and the like.

Go ahead and find a tracking tool that works for you. If you like to keep things simple, a notebook or a spreadsheet can work. You could also use something a little more modern and streamlined, like a Smartphone app or accounting software. Or, if you prefer the hands-off approach, you could hire an accountant to handle all of that information for you.

It doesn’t really matter which method you choose. It only matters that you use it consistently, and the sooner you start using it, the better.

Get Wise About Witholdings

No matter where you work, there’s a very good chance that your employer withholds some taxes from each paycheck. Now, before things get crazy, is a good time to make sure all the withholding information is correct and up-to-date.

For example, if the amount of hours you work has changed, it could be that your employer didn’t make the appropriate updates and that too much or too little is being withheld. Either way, if you don’t get withholdings straight and correct now, you’re going to have a big mess to sort out come tax time.

Since you’re likely to have a lot on your plate when taxes come due, get at least this part of the equation taken care of and out of the way now.

Create a Plan for Giving

Finally, go ahead and put together a plan for how much, what, and to whom you’ll make charitable contributions throughout the year.

This will make it a lot easier to keep track of all of your giving and to not feel bad about saying no to any of those countless giving opportunities that pop up throughout the year.

It will also ensure that you get all of the deductions to which you’re entitled at tax time.

If you can follow these tips and just, in general, focus on properly preparing for tax time throughout the year, you’ll have a much lower-stress experience all around.

Remodeling, Financing and Taxes

Is your home in serious need of renovation? Whether it needs a remodel because it’s looking old and out of date, or for more serious reasons, such as a failing roof, where do you get the money to pay for things like that? Unless you just have thousands of dollars at your disposal, the answer is likely through financing. However, there’s a smart way and a not-so-smart way to secure financing.  

Obviously, as a responsible homeowner, you want to choose the smart way.

Good Credit Options

The best case scenario is that you have excellent credit and can work with an upscale, reputable lender, such as a bank, a broker, or a credit union. If you are able to secure a loan from one of these choosy institutions, you can use your home as collateral and borrow the amount you need.

Just don’t go too crazy with borrowing, or you could blemish the spotless credit you’ve worked so hard for. Only borrow what you actually need and don’t get sucked into doing extra repairs or remodeling just because you have the credit available.

Tap Into Your Savings

If you have a lot of equity built up in your home, then you can borrow against that to handle remodels and repairs. If you don’t, however, then you may have to look to other options.

One of the best options is to tap into your savings account. That might be tough, but paying with cash is always better and cheaper than paying with credit in the long run. You should only do this, however, if you have enough to still maintain some degree of savings. Most financial advisors suggest always keeping at least three months worth of living expenses in your savings account. If you can do that and still manage your remodel or renovation, then go for it.

Tapping into your savings is serious business, though, so save this option for repairs and renovations that are absolutely necessary, not just ones that are going to make your home look prettier.

Break Out the Plastic

When you’ve exhausted all other options, it may just be time to use your credit card to finance those remodels or repairs. As a caveat though, don’t use your plastic if you’re not able to avoid paying interest on this hefty purchase. If you can pay off more than your minimum amount each month, even after the repairs are done, then go for it. If you can’t, though, you may want to keep searching for the right fit for you.

And, speaking of the “right fit,” every person and every person’s situation is different. If your home really is in need of some TLC and you’re not sure how to foot the bill, go over your options with a financial advisor, determine of your financing of the project can result in tax breaks. These professionals can always help you to find the right solution for your situation.

Celebrities Experience Financial Woes Too

Being a celebrity means being famous, glamorous, and, it would seem, having more money than one person could possibly spend in a lifetime. Somehow, though, there are always a few celebrities who manage to blow through all their dough or commit other grave financial errors. Some have even ended up bankrupt. Here, we’ll recap some of the biggest celebrity blunders...and discuss how you can avoid making the same mistakes.

Marlee Matlin

Marlee Matlin may be an Academy Award winning actress, but she’s also pretty forgetful. She

“forgot” to pay her taxes and ended up owing the IRS about $50,000.

As a bonus, we also have to mention Wesley Snipes, another oh-so-forgetful actor. His tax evasion crimes were so serious that he spent three years in prison for his so-called memory lapse.

Obviously, the takeaway is to always pay your taxes- you just can’t cheat Uncle Sam. Even if you can for a while, it will eventually catch up to you. If you don’t think you can manage your taxes and the ever-changing tax laws on your own, hire a professional to do it for you.

M.C. Hammer

A famous musician filing for bankruptcy isn’t something that happens every day. That’s probably why it made headlines back in the 90s. The famed musician reportedly blew through more than $33 million in a year. He bought a huge staff to tend to his every need, a literal mansion, a stable (yes, a stable), and then faced a bunch of lawsuits for copyright infringement.

The moral of this story- other than being original with your songs- is not to be a big spender. Just because you’re making more than you ever have before or you get a nice nest egg doesn’t mean you should spend it all. Save, invest, and find a trustworthy financial advisor to help you make smart choices.

Teresa Giudice

Our final “financial failure” is Teresa Giudice, who rose to fame on the reality show The Real Housewives of New Jersey. Giudice ended up going to prison for false loan applications for mortgages that she signed.

If she’s to be believed, she had no clue what she was signing. She simply trusted her husband’s judgment and signed what he handed her without reading it. The rule is to always read and understand what you’re signing; for best results, have a financial advisor and/or an attorney look over any legal documents. And always be careful about whom you trust when it comes to your finances and your good name.

If rich celebrities can make such big mistakes, then certainly you can too. However, you don’t have to. Not if you learn from their errors and exercise caution and good judgment in your own financial life.

Related articles

• 10 Celebrities Convicted of Tax Evasion

Are You Asking for an Audit?

An audit, which involves having your finances gone over with a fine-toothed comb, isn’t something that anyone wants. In fact, it’s something that a lot of people dread. If you’re like most people and want to avoid an audit, don’t ask for one! We know you wouldn’t actually ask, but certain things you do are practically a recipe for an audit, so, if you do these things, you might as well! By avoiding the audit “red flags,” you can greatly reduce your risk of being one of the unlucky taxpayers.  

A Drastic Change in Your Income

If your income suddenly increases or decreases, this could spell trouble for you. The IRS typically takes notice of big changes in income, and if it has reason to believe you’re under-reporting income or that you have done so in the past, an audit is probably on the way.

There’s not much you can do about a major change in your income. If there has been a change, just do your reporting extra carefully in the coming tax year and make sure the change is easily explainable.

Lots of Business Expenses

Plenty of people have legitimate business expenses they can claim. However, some business expenses can look fishy to the IRS. This is especially true for those who work for themselves, particularly when they have lots of business-related deductions without bringing in a lot of bank.

Large changes in the amount of business expenses reported or business expenses that seem odd, like a trip to a popular vacation destination, also tend to raise red flags. The best you can do is to be as honest as possible, to never take deductions that aren’t 100% legitimate, and to file away all your receipts, just in case.

Greater-than-Usual Generosity

Giving to charity is a wonderful thing. Unfortunately, too much giving, especially if it’s not typical for you, can look bad. Each year, a great many people exaggerate their charitable donations in order to receive a nice tax write-off. Even if you wouldn’t do something like that, a large spike in your giving can raise suspicions.

The answer isn’t to stop giving or to stop claiming your donations. It’s to gradually increase the amount you give, since that will spike fewer suspicions than a sudden, drastic change. Also, keep all your receipts and records handy as proof.

In fact, careful record-keeping really is the smartest thing you can do in all aspects of your finances. That’s because, even if you follow all of these tips to a tee, audits still happen. They can happen to anyone at any time, so, even if you’re doing everything right, it’s always best to be prepared.

Related articles

• Life Lessons: IRS audit red flags

Is a Like-Kind Exchange Good for Your Business?

Normally, when companies sell properties, they must pay taxes on any gain they receive. Like­ kind exchanges, transactions in which companies trade properties, may be carried out without any immediate tax consequences.

They must satisfy IRS rules, however, which include:

•    The properties must have the same "nature or character," as set forth in IRS

guidance.

•    The exchanges can be business or investment properties put to a productive use. 

•    The exchanges can't involve inventory, most securities and some other assets.

•    Taxes must be paid on any cash or non-similar property that is part of the deal.

Keep in mind that like-kind exchanges are tax-deferred transactions, not tax free. When a company eventually sells the property it received in an exchange, it must pay tax on any gain from its original investment.  In the meantime, though, the business/company can use the funds it would have paid in taxes and it has acquired a new property that may better suit its needs without necessarily making a cash outlay.

Want more information about whether like-kind exchanges can be a good strategy for your business and insights on their tax impact? We can help. Contact us today for expert advice on the best ways to address your business and tax concerns.

How Giving Leads to Saving

You’ve probably heard the saying that giving is better than receiving. That may be true, but why can’t you have both? If you are someone who gives money to charity or donates goods to charitable organizations, you are entitled to deductions that can help you save money.

Every Contribution Counts!

Most people can’t afford to give huge amounts of money to charity each year. However, even people who can’t give large amounts will usually donate something throughout the year. Maybe they add a dollar to their supermarket purchase to help support charity, or maybe they purchase girl scout

cookies or something else small for a good cause.

However, even these little contributions count; it’s just up to the giver to remember to count them! Donors can request a receipt, even for small donations, and store them until tax time. They’re often surprised to find how much they’ve actually given throughout the year...and how much of a break it can cut them on their taxes.

Add Up Expenses

Sometimes, “giving back” just means handing over some cash, buying something, or driving items to the local thrift store. Other times, however, there are expenses involved in being a good person.

For those whose good deeds require them to travel, such as to support or take part in a charitable event, the costs of things like gasoline, airline tickets, hotels, and even food eaten along the way can all be deducted.

Be Honest

As with all things tax-related, be honest in your dealings. Don’t over-declare donations or over-exaggerate their worth. After all, the whole point is to do something good and get a little back, not to be greedy and dishonest.

Those who give (and receive) the right way will enjoy two rewards: the reward of having done the right thing and the financial reward of a nice tax break.

Related articles

• How to Estimate the Value of Clothing for IRS Deductions

Common Tax Return Mistakes and How to Avoid Them

Still procrastinating on taxes?  For even the most together taxpayers, filing taxes can be stressful. One little mistake can hold up your return and could even result in fines, fees, and penalties. Here, we’ll explore some of the most common (and costly!) tax return mistakes and what you can do to avoid making them on your return.

Late Filing and Payment Fees

Taxes have a due date- April 15^th. If you file them after that due date, then you immediately start accruing late fees. The same goes for payments that are due to the IRS. If you don’t pay when the payment is due, you can expect to wrack up some pretty heavy costs.  

The good news is that, more often than not, you can avoid late fees. The easiest way, of course, is to avoid making payments and filing taxes late! When that’s not possible, contact the IRS to find out what your options are. If you can show proof that paying or filing on time wasn’t possible, you may be granted an extension. The IRS is usually more than willing to work with those who are trying to pay- even if they have to pay a little late.

Forgetting an Account

Many people have several different types of bank accounts, and it’s their job to report all of them to the IRS. To keep from forgetting all of your accounts, keep a detailed list of the accounts and their amounts. If it’s too late for that and you’ve already skipped over an account on accident, don’t panic.

You can file an amended tax return or simply send the correct information to the IRS with a quick note of explanation, Sometimes, the IRS may impose a small fine, but usually it will just be glad to have the correct information and will add it to your file. 

Not Paying in Full

Finally, not paying taxes in full, known as underpayment, comes with some pretty serious penalties of its own. To avoid these penalties and potential legal action if the situation is really bad, make sure you honestly and accurately file your returns each year and that you pay what is due when it’s due.

Related articles

• Hackers Hit The IRS And Make Off With 100k Tax Payers' Files

What To Do When You Can't Pay the IRS

There are many reasons why a person might owe money to the IRS. The reasons, however, are not what’s important. What is important is paying the money that’s owed. If you’re unable to do that, then you do have a few options. Make sure you pick one of these smart ways to pay, rather than doing something drastic and potentially illegal!             

File Anyway

If you’ve done the math and have realized there’s no way you can pay your taxes this year, file anyway. Remember, you are legally required to file taxes each year. If you don’t, you’ll face penalties for filing late, which would only be added to that money you can’t pay. You can request extensions and find ways that make paying your taxes manageable. In fact, that’s what you have to do because just failing to file and ignoring the problem isn’t going to get you anywhere.

Pay in Installments

For most people, paying the monies owed to the IRS isn’t the problem; the problem is being asked to pay it all at once. Fortunately, the IRS will almost always work out payment plans with people who owe. Those who owe less than $50,000 can fill out an installment agreement request (Form 9465). If you owe more than that, talking to an IRS agent individually may result in a payment plan you can manage.

Talk it Out

Finally, no matter what, remember that you can’t hide from the IRS. If you’ve gotten yourself into a bad situation and are unsure how to “pay it away,” contact the IRS and ask about your different options. Or, you could also work with a financial advisor to come up with a “payback plan.” The important thing is not to hide from your financial problems but to be proactive and willing to fix them.

Remember, everyone makes mistakes and gets into tough financial situations. Don’t fault yourself for that; just find the right way to get out of the situation.

Related articles

• IRS Fresh Start Program Installment Agreement
• Video: IRS Payment Plans Explained