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Tax season always seems to creep up before you know it. Now is the time to start prepping so you can breeze through next year’s filings. No need to stress – with some organization and planning over the coming months, you’ll have all your ducks in a row when April rolls around. This handy guide breaks down 13 tips to simplify tax time in 2024. From smart receipt tracking to getting your documents in order, you’ll be surprised at how easy preparation can be.
Organize Your Documents
Collect tax forms, expense receipts, and documents needed to file your return. Organize them in folders by category to make information easy to find later.
Understand Tax Changes
Stay up-to-date on new tax regulations each year. Understanding the latest deduction rules and eligibility requirements will help ensure you apply them accurately.
Research deductions and credits to minimize your tax bill. Tax prep software and IRS publications can help identify which ones you qualify for based on your income, family status, education expenses, retirement contributions, and other factors.
Contribute to Retirement Accounts
Contribute the maximum to retirement accounts which can lower taxable income. 401(k)s, IRAs, HSAs and others offer free money through employer matches and compounding investment growth.
Adjust Your Withholdings
Adjust the tax withheld from your paycheck if needed to avoid over or underpayment. Use the IRS calculator to check that your withholding allowance aligns with your tax situation.
Keep Business and Personal Expenses Separate
If self-employed, use separate business and personal accounts and cards. This makes separating expenses easier for accurate reporting and deductions.
Consider Charitable Contributions
Document monetary and goods donations to nonprofit organizations for potential deductions. Values, dates, charity names, and receipts are key details to track.
Keep Up with Medical Expenses
Save healthcare invoices, premium statements, mileage logs, and eligible over-the-counter purchases. You can deduct the excess amount if these exceed 10% of your income.
Use Tax Software or a Professional
Leverage DIY tax software or enlist a professional based on your comfort in navigating changing tax laws. Choose what fits your budget and tax situation.
Educate Yourself on Tax Credits
See if you qualify for special credits like education, child, or energy efficiency credits that directly reduce owed taxes. Understanding eligibility requirements allows you to maximize savings.
Record Home Office Expenses
If self-employed, calculate the percentage of your home used for business. Track related home office expenses like utilities, internet, renovations, and cleaning for potential write-offs.
Stay Organized Throughout the Year
Stay organized all year by keeping digital or physical folders with tax document copies. Designating accounting software or a weekly time to process paperwork prevents stressful, last minute scrambling.
Review Last Year’s Return
Examine previous tax return copies noting items that impacted your tax burden like deductions lost by higher income or major life events. Compare to estimate status changes to consider.