Filing for taxes can be a fun, stress-free process if you follow simple tips. Most dread surrounding the famous mid April date is rooted in lack of preparation. Some people wait until the last minute to file while others sloppily plow through the filing process. In both cases you’re asking for an audit by being careless.
Use these 4 smart tips to file for taxes.
Don’t Go the Rapid Refund Route
Rapid refunds may seem like a good idea but you’ll be paying dearly for this convenience. Don’t take this route if you’re working with a consultant because this is a short term loan. Expect to pay $50 or more to handle this predatory, short term loan. Ditch the idea. Be patient. Wait for your refund check.
Hire an Accountant
Although you may pride yourself on doing your taxes it’s time to hand the job off to a professional. Don’t let your pride get in the way of a larger refund check. Working with professionals saves you time and a potential boatload of headaches. Hire an accountant to highly reduce your chances of being audited.
Some people can easily do their taxes on their own. This includes people who have few investments and non-homeowners.
Contributing to charities through donations other than cash, taking highly complex deductions, learning about international taxation, owning your business, trading forex, stock or other investments or having a baby can greatly complicate the filing process. To stay on the right side of the law and maximize your refund checks work with an accountant.
Don’t Panic Over Audits
If you’re like most people the idea of an audit conjures up images of the worst nightmares. Imagine pictures of yourself spending years in prison or having your checks garnished for the remainder of your life. Fortunately, few people experience such dramatic penalties after being audited.
Although going through an audit can be a frustrating experience you won’t become bankrupt after being under scrutiny. The IRS needs specific triggers in place to handle the sheer volume of millions of tax returns which flow in their direction in mid April. You may not even be doing anything wrong. The IRS needs to weed out potential problem cases through spotting certain filing patterns.
File properly to avoid any escalation of audits. If you did everything correctly you have nothing to worry about. You won’t need to pay any fines or spend time in the joint if you are on the up and up.
Weigh Time versus Potential Reward on Deductions
For some individuals filing deductions is a waste of time. If you want to take the standard deduction you will greatly simplify your filing process and most taxpayers will receive between $5,800 and $11,600 for standard deductions.
If you have large medical expenses, big charitable donations or high mortgage interest payments consider itemizing these costs to save yourself thousands of dollars. You’ll have to itemize each deduction individually but the money you’ll save by doing so is well worth the effort.