Everyone dreads that time of year when we have to file your taxes. You'll never know if it's going to be a payment or a refund. This article will show you how to plan for taxes so you will be better prepared next year. Here are five things you should consider:
1. How much allowances to claim. The allowances on your W-4 form at work have a direct impact on how much you will be taxed. These allowances you take are optional, if you choose to withhold more allowances than normal, you might be able to avoid paying taxes next year.
2. Planning to sell your home? There are huge deductions for people who sell their primary residence. Up to $250,000 of the capital gains you'll get from the sale of your home for singles is exempt from taxes. For a couple the amount is doubled. There are restrictions to this however, you'll need to have lived in your home for two to five years before selling it.
3. Get an early start. You may have had a tax credit this year, but it's never too late to start thinking about other ways to receive tax credits. For example, next year your kids might go to college. This will entitle you to education credits, which includes the money you spent on educational expenses. There are many other credits you can claim, why not find out more about them so you can be better prepared.
4. Itemize. Once you've itemized all the contributions, expenses that qualify you for tax deduction, you will get a much clearer picture. With this in place, you can increase in areas where it could help you to get a larger deduction next year. But be sure to read the fine print, and learn the requirements for each deduction.
5. Check your status. Your status has an impact on how your tax is assessed. If you're single, there's not much you can change. But if you're also a parent, then you qualify as the Head of Household. This status can get you a larger standard deduction than you can as a single. Filling your status in correctly will mean better benefits for those single parents and married or widowed people with children.
You can change the way you feel about your taxes, by getting organised and start researching the different ways to increase your chances of a tax credit. The five ways listed above is just a start, there are much more to be gained if you widen your strategy.
Please read up our other articles on finance tips at Invest Money Stocks for a better understanding of finance management.
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