Miss your tax deadline, however, and you might have to pay a penalty. Here are four tips for taking the stress out of tax day.
1. Plan Ahead
It seems the United States is a nation of procrastinators. Around 14 million people wait until the last minute to file their taxes, according to research.
Don’t be one of them.
Sorting through bank account statements and invoices as the clock counts down to tax day can be seriously stressful, and you could miss your deadline altogether.
Plan ahead, instead. If you use tax filing software, you can complete your taxes in stages and save your return as you go – a much better option than leaving everything until April 14.
“[In 2017], the deadline fell on April 18. That year, 17 million returns — 11% of the total — were filed that very week. Another 10% came in the week just before,” says CBS News.
2. Use a Financial Management App
Still using manual methods to file your taxes? You can save time and hassle with the latest technology.
Instead of a pen, paper, and a calculator, download a financial management app to track income, expenses, and other financial information from the 2018 tax year.
TurboTax and QuickBooks are just two of the accounting apps you can download onto your smartphone or tablet to optimize tax prep. These apps monitor business payments, bills, and even payroll.
“Thanks to technology, there are mobile apps on the market that will make the process of doing your taxes less overwhelming,” says Careful Cents. “You can keep track of your income, expenses, and receipts year-round, to make the most dreaded time of year a little less painful.”
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3. Find Out About Tax Refunds
Few people like filing federal taxes. The process is long and laborious, and there are probably hundreds of other things you would rather be doing. Still, think of the positive: Once you file your taxes, the IRS might hand you a refund for overpaid tax.
The average individual income tax refund in 2016 was around $3,050, according to the IRS. Some people, however, received tens of thousands of dollars. How much will you receive?
Not all tax refunds are automatic, though. In fact, the IRS might owe you cash that you don’t know about. This is why it’s important to do your research and call in a professional. Hiring an accountant might be a good idea if you think the IRS owes you a large sum but are not sure how to pursue a claim.
An accountant can also help you chase up a tax refund if you haven’t heard back from the IRS.
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4. Find Out About Tax Credits
The IRS offers tax credits that could lower the amount of tax you pay this year. These financial incentives include Earned Income Tax Credit and Saver’s Credit.
You might also be eligible for tax credits if you have invested your education or retirement.
Just like tax refunds, not all tax credits are automatically applied to your account, so you will need to find out whether you qualify. Again, a tax consultant can help you with this.
“A tax credit is a dollar-for-dollar reduction in your actual tax bill,” says NerdWallet. “A few credits are even refundable, which means that if you owe $250 in taxes but qualify for a $1,000 credit, you’ll get a check for $750.”
These are just four tax day tips that will make it easier to manage your financials in the next couple of months. Planning ahead, downloading a financial management app, and finding out about tax returns and tax credits will ensure tax season is a smooth one.
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