Easy Tips for Filing Your Taxes

3 Easy Tips for Filing Your Taxes This Year

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It's no secret that most of us consider tax season to be the least exciting part about a new year. It's a necessary evil when it comes to "adulting," and probably something we should have learned more about in school. Thankfully, I'm here to tell you that filing taxes doesn't have to be a dreadful chore if you use the right resources. Plus, there are a few things you can do today to lower your tax bill or increase your refund. Here are some easy tips that will make filing your taxes a smooth process this year.

1. File electronically with TurboTax.

I've talked before about how technology makes it easy to invest. Well, the same goes for taxes. Software platforms like TurboTax make it fast, easy, and cheap to file. I've used TurboTax for the last six years and can honestly say it's a game changer.

I use TurboTax for three reasons. First, it makes filing quick, easy, and inexpensive. Second, TurboTax searches the nooks and crannies of the tax code to ensure that I receive every tax break I deserve. Third, TurboTax is like a crash course in taxes—but actually engaging and interesting!

My taxes used to feel like a daunting black box that I would never understand. Should I choose the standard or itemized deduction? How will my donations to charity impact my returns? How about my student loan interest payments? What's the difference between a deduction and a credit? TurboTax answers all of these questions in a simple, user-friendly way. The software walks through each step and teaches you exactly how your taxes work.


2. Finish contributing to your tax deductible accounts.

There's a good chance you have a tax-advantaged account like an IRA. Contributing to this can cut your tax bill or increase your refund because you don't have to pay income tax on the money you put in. Even though we're already in the new year, you can retroactively contribute to your IRA (up to $5,500) before the April 15 deadline and still receive the prior year benefit. Unfortunately, the deadline for your employer-sponsored 401(k) is still December 31.

Some of you may also have a Health Savings Account (HSA) if you have a high-deductible health plan with your employer. If so, you can contribute up to $3,450 ($6,900 for families) before April 15 and receive tax benefits. An HSA is a special kind of medical savings account that is even more tax-efficient than an IRA or a 401(k). The money you put in is pre-tax, it grows tax-free, and it comes out tax-free, as long as you use it for medical expenses. With an IRA or 401(k), you still have to pay taxes when you withdraw the funds in retirement.

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3. Don't wait until the last minute.

This might seem like a no-brainer, but you may not realize all of the benefits to filing early:

  1. Lower the risk of identity theft. Tax season is prime time for identity thieves to submit falsified tax documents with your social security number and claim your refund. This a pain to deal with and can take up to a year to resolve with the IRS.
  2. You may run into unexpected complexity, especially if you lived in multiple states, switched jobs, got married, started a family, etc. If you have to track down additional documents, starting early is helpful.
  3. If you file early and are owed a refund, you'll receive your cash sooner and can let compound interest work for you right away.
  4. If you owe taxes this year, you'll want to have time to collect the cash and pay timely. Otherwise, you'll owe interest and penalties. And nobody wants to pay the IRS more than they have to.

The Bottom Line

Filing taxes shouldn't be a chore that we dread year after year. Software platforms like TurboTax make it easy and cheap to file quickly and accurately. Plus, they actually teach us about our taxes and ensure we receive the deductions and credits we deserve. But don't procrastinate! Get started today, and I promise you'll be pleasantly surprised. You may even become a nerd like me and look forward to it every year. Did I just admit that?

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