Unless you’re due for a big tax refund, you’re probably going to lose a little bit of money during tax season—lots of us have to pay taxes to the IRS, and you also might have to pay for tax preparer fees if you’re going to use a tax service. Here are a few ways you can get through tax season with the least possible amount of financial strain.
When preparing for tax season, considering the services of a reputable Toronto Tax Accountant can streamline the process, ensuring accurate filings and maximizing potential deductions, though it’s prudent to budget for associated fees alongside tax obligations.
Adjust Your Withholdings
Are you going to owe taxes to the IRS, or are you going to receive a tax refund? You’re actually able to sway the likelihood of receiving one or the other—it all comes down to how much tax allowances you claim on Form W-4.
A tax refund is nice because you get a big chunk of money to go spend on things, like a brand new watch, or maybe even your dream vacation. But wouldn’t it be nice to receive that money throughout the year? Consider claiming more tax allowances so less money is withheld from your paychecks.
You might not get a tax refund, but the extra money that you’ll bring home each paycheck may better help you prepare your finances for tax season.
Budget for Tax Preparer Fees
It’s a good idea to put money away to pay taxes that you owe the IRS. But you should also put a little extra money away to pay for tax preparer fees. Most tax preparation services cost a small stipend. They’re definitely worth the price—these services make it so much easier to file your taxes and calculate your tax obligation. Just be sure to budget for this expense.
Some tax services allow you pay tax preparer fees from refund money. If you get a tax refund, some of the money will automatically go toward paying your fees. This is a good option if you don’t have the money up-front to pay your service fees.
File the Old-Fashioned Way
Want to avoid paying tax preparer fees altogether? You always have the option of filing your taxes the old-fashioned way: printing out IRS forms at home and mailing your return to the IRS. Manually completing your tax return is undoubtedly more difficult than using a software program, as you’ll have to make calculations by yourself and make sure that you’ve assembled all the forms you need to file. But you could save a little bit of money if you’re willing to put in the extra work.
Claim Tax Deductions
Do you have lots of tax-deductible expenses? Be sure to claim them when you file your tax return so you can maximize your tax savings. Deductible expenses include charitable contributions, medical expenses, and student loan interest. If you own a business, you can deduct certain business expenses like office equipment and utilities.
Be sure that you have records for all of the expenses you plan on deducting—you can use bank account statements as your records. You also might consider using a spreadsheet to track all of your deductible expenses throughout the year.
Request an Extension
The tax deadline is April 15. If you don’t think you can complete your tax return by that deadline, you should consider filing a request for a tax extension. If approved by the IRS, you’ll get extra time to complete your return. Just be aware that you should file this request well-ahead of the deadline.
The IRS may penalize you if you file your return late. These penalties increase every month that you don’t pay your taxes and can significantly increase the amount you owe, so you should file your return as early as you can.
