April 15. Tax Day. Does this day strike fear into your heart as you worry about paying taxes? Maybe you are unsure exactly how to pay taxes correctly and don’t know how to find out. People often pay consultants to do their taxes for them. Getting a consultant is always an option, but sometimes money can be tight, and you don’t want to pay any more than you have to. In this article, you will learn ways to make tax season a breeze and also find resources to allow you to pay your taxes.
Here are five ways to make the tax season stress free this year and every year.
1. Routinely Update Your Books
Instead of waiting the entire year for tax day to come around, which can cause intense stress as you search for receipts and records, it is crucial to update your finances regularly. Perhaps set aside one night a month, and use that time to update your books. When tax season rolls around, you will be calm and ready for it. You will be organized, and the whole process will go much smoother.
2. Learn Which Expenses Are and Aren’t Tax-Deductible
One of the things you need to consider throughout the year is what the IRS does and doesn’t consider a tax deduction. If you claim something as a deduction, but the IRS conducts an audit and says it isn’t deductible, you’ll face steep penalties and interest payments. The biggest mistake people make is claiming something as a business expense while using it part of the time for business and the rest of the time for pleasure. Some common examples could be a home office or a car used for both work and home life. The amount the item is used for a business determines if it’s a valid deduction. Knowing what tax-deductible things will allow you to feel confident and ready for tax season.
3. Hire Family Members
If one of your family members is helping you with something connected to your home-based business, you need to hire them officially. Not only does hiring family members help clear up any liability questions, but by formally paying them, you qualify for tax savings. The compensation you pay your family member decreases your overall taxable income. It is vital to find as many of these benefits as possible in your life. You will notice that the amount of taxes you have to pay will decrease as you learn what deductions and credits you have.
4. Organize Your Receipts
Along with keeping track of your books once a month, it is beneficial to have a place to store and keep track of your receipts. This will easily find your expenses and earnings for any period. Staying organized is critical with taxes. Keep a file for every year and stay organized, and you will find that you are much more calm and ready for tax season.
5. Use these Free Tax Helpers!
It can often be challenging to learn how to pay your taxes. There are many different forms, and they can be intimidating when you look at them for the first time. Here are a few websites that
We hope you feel at least a little more confident in your ability to pay your taxes! You can find more helpful resources about Tax and Wealth Preservation as you keep coming back to MyPaths!
Authored by Carter Walch