Helpful Tips for Tax Season

Taxes can be a confusing experience, especially if you're not sure you're taking advantage of all the deductions and credits available. This guide will cover key strategies, deductions you might be missing, and even options for filing your taxes for free.
 
Often Overlooked Tax Deductions:

1. Home Office Expenses: If you work from home regularly, you may be able to deduct a portion of your home expenses like utilities, mortgage interest, and internet bills. Keep track of these expenses throughout the year for accurate deductions.
2. Charitable Donations: Did you donate to qualified charities?  You may be able to claim deductions for cash and non-cash contributions like clothing or household items. Remember to keep receipts for documentation.
3. Student Loan Interest: If you're paying off student loans, you may be eligible to deduct up to $2,500 in interest paid. This can be a significant deduction for many borrowers.
4. Medical Expenses: Did you exceed a certain percentage of your adjusted gross income (AGI) on medical expenses? You may be able to deduct the excess amount. Keep detailed records of medical bills and receipts.
5. Retirement Contributions: Contributing to your IRA or employer-sponsored retirement plan like a 401(k) reduces your taxable income. Plus, your contributions grow tax-deferred, offering long-term benefits.

 
Maximizing Your Refund:

1. Review Your Withholding: Withholding enough taxes throughout the year can help you avoid a large tax bill at filing time. Adjust your withholding if necessary.
2. Claim All Eligible Credits: Research and claim credits you may qualify for, like the Earned Income Tax Credit (EITC) or Child Tax Credit.
3. File electronically: E-filing may be quicker and often comes with free federal filing options.

 
Free or Low-Cost Filing Options:

1. The IRS Free File Program: Many tax preparation software companies offer free filing for taxpayers with a certain income level. Check the IRS website for eligibility and participating companies.
2. Volunteer Assistance Programs: Organizations like the AARP offer free tax preparation assistance to eligible individuals.

 
Tax Relief for Unexpected Expenses:

1. Itemized Deductions vs. Standard Deduction: If you have significant medical expenses, itemizing deductions might be advantageous. Consult a tax professional for guidance.
2. Disaster Relief Programs: The IRS offers special tax relief for victims of declared disasters. Check their website for specific details and eligibility.
3. Extension for Filing: If you need more time to file your taxes, you can request an extension and may receive an extension to October 15th. However, you'll still need to pay any estimated taxes owed by April 15th.

 
Preparing for Next Year:

1. Organize Your Records: Keep all tax-related documents like receipts and 1099s organized throughout the year for easy access come filing time.
2. Consider Estimated Taxes: If you have income outside of a traditional paycheck, you may need to make quarterly estimated tax payments.
3. Stay Informed: Tax laws and deductions can change year-to-year. Check the IRS website or consult a tax professional for updates.

By being proactive and informed, you can navigate tax season with confidence and potentially maximize your refund. Remember, Personify Financial is here to support you with financial resources and tools. Let's make tax season less stressful and more rewarding!

Disclaimer: This blog is for informational purposes only and does not constitute professional tax advice. Please consult with a qualified tax professional for personalized guidance and recommendations.