Whether most of your documents are still on paper (and still arriving the old fashioned way – via your mail carrier) or whether you\u2019ve managed to go the paperless billing route and have converted past paper files to electronic files, you need dedicated folders in which to organize different documents as they arrive.
\n![\"Tax](\"https:\/\/www.e-file.com\/info\/wp-content\/uploads\/2018\/04\/headache-to-cakewalk.jpg\")
\nSpecifically, you need to save and file:<\/p>\n
- \n
- Investment summaries<\/li>\n
- Pay stubs<\/li>\n
- Property tax bills<\/li>\n
- Records of charitable donations<\/li>\n
- Copies of state and local estimated tax payments<\/li>\n
- Receipts from medical expenses (including services paid for with your health savings account card), tuition expenses, child care, and business costs like home office space, office supplies, client lunches, and so forth<\/li>\n<\/ul>\n
If you\u2019re like many people and you tend to misplace or lose paper receipts, download a mobile app to scan them and send them to yourself. If you happen to use Outlook or Gmail, you can even play with the settings so that any email containing the words \u201c2018 Tax Documents\u201d will go directly into the folder of the same name.<\/p>\n
Learn from last year\u2019s tax experience<\/strong><\/p>\n
If your latest tax return is successfully completed, use it to inform your decisions for filing next year. For example, if you under-withheld taxes this year and now unexpectedly owe the IRS, make sure you make the necessary adjustments this time around to prevent that from happening again.<\/p>\n
On the other hand, if you\u2019re receiving a large refund, you\u2019ll want to decrease your exemptions. While big refunds can be exciting, ideally, you want to find the sweet spot of just breaking even with the IRS (unless you\u2019re interested in giving the U.S. Government an interest free loan, which is exactly what has happened when you find yourself with a large tax refund.)<\/p>\n
Ideally, the money that was an interest-free loan to the U.S. government should be working for you, which is to say it should be in an interest-generating savings account or other investment vehicle that will earn you money.<\/p>\n
If you feel confused about the ideal amount to withhold, you can use the IRS Withholding Calculator (yes, they have that) to plan for next year. Have your most recent pay stub and income tax return on hand. Once you\u2019ve determined what adjustments to make, be sure to communicate this with your company\u2019s HR staff so the changes are put into place.<\/p>\n
Keep your eye on the ball of the future<\/strong><\/p>\n
Do you anticipate life changes in the coming year? If so, they\u2019ll affect your filing status.<\/p>\n
- \n
- Getting married or having a baby? You\u2019ll likely need to adjust your withholdings since married couples who file jointly qualify for a reduced tax rate. And having a baby means you can claim them as a dependent, which also affects your withholdings.<\/li>\n<\/ul>\n
- \n
- Buying, refinancing, or selling a House? If you made a profit on the sale of your house, you may have to pay capital gains taxes (or on a more positive note, you might be eligible for a homeowner\u2019s tax credit or other deductions). If you bought or sold any real estate this year, make sure your HUD-1 form goes into that all-important tax file we discussed earlier. After you sell a piece of real estate, it\u2019s always a good idea to talk to an accountant who can likely better foresee potential tax breaks or penalties.<\/li>\n<\/ul>\n
- \n
- Investing in education? If you or your kids are attending college, you might qualify for the Hope Scholarship Tax Credit and\/or the American Opportunity Tax Credit. If you qualify, you\u2019ll need to document expenses for tuition, books, and any other school-related supplies.<\/li>\n<\/ul>\n
By keeping these things in mind and staying on top of changes that may affect your deductions, come next year, tax time won\u2019t have to be a headache. And filing with E-file<\/a> can make it even easier. In fact, it might even be a cakewalk.<\/p>\n","protected":false},"excerpt":{"rendered":"
It\u2019s the time of year when tax filing is on most people\u2019s minds. Maybe you\u2019re relieved to have filed early and to have already put your refund to good use. Maybe you\u2019re currently up to your eyeballs in tax forms, hoping for the best. Or maybe you\u2019re imagining all the cool things you could do with some extra cash as you eagerly await your refund.<\/p>\n
- Investing in education? If you or your kids are attending college, you might qualify for the Hope Scholarship Tax Credit and\/or the American Opportunity Tax Credit. If you qualify, you\u2019ll need to document expenses for tuition, books, and any other school-related supplies.<\/li>\n<\/ul>\n
- Buying, refinancing, or selling a House? If you made a profit on the sale of your house, you may have to pay capital gains taxes (or on a more positive note, you might be eligible for a homeowner\u2019s tax credit or other deductions). If you bought or sold any real estate this year, make sure your HUD-1 form goes into that all-important tax file we discussed earlier. After you sell a piece of real estate, it\u2019s always a good idea to talk to an accountant who can likely better foresee potential tax breaks or penalties.<\/li>\n<\/ul>\n
- Getting married or having a baby? You\u2019ll likely need to adjust your withholdings since married couples who file jointly qualify for a reduced tax rate. And having a baby means you can claim them as a dependent, which also affects your withholdings.<\/li>\n<\/ul>\n