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Don’t let your tax return be a problem this year. Check out these 99 TAX TIPS from Tax Giant Online – and file your taxes with the LOCAL Tax Giant Online experts for only $99 PREPARED!

99 Tax Tips

  1.       Plan Ahead- Gather all of your necessary documents in advance to ensure that you, and your tax professional, have everything ready when it’s time to file.
  1.       What to Gather- At minimum, you will need income documentation and identifying information (such as Social Security numbers) for any individual references on your return. This includes dependents. A consultation with a tax professional can help you determine any other documentation that you may need, depending on your circumstances.
  1.       Stay Organized- Keep all of the documents you need to file taxes in a safe and secure place so that you can easily find them when the time comes.
  1.       Keep Everything- Keep records of any purchases, donations, bills, etc. that may be deductible. 
  1.       Do Your Research- Stay informed on current tax policies to ensure you are maximizing your deductions. 
  1.       File as Early as Possible- Filing early can cut down on the processing time of your return. It can take much longer to receive your return as tax season comes to an end. 
  1.       Know the Deadline- Knowing the tax deadline will help you avoid filing too late. For example, this year the deadline was extended to April 18th. 
  1.       On Time- Your return is considered late if it is postmarked, or submitted electronically, after the deadline. 
  1.       Be honest- You should always be honest about income, credits, and deductions. These items are subject to review, even years later. 
  1. Communicate- Share as much as you can with your tax professional, so they can find the best plan of action for you. 
  1.       Don’t wait- The tax deadline will be here before you know it. Keep the stress of last-minute rushing at bay by getting an early start. 
  1.       Extensions- If you know that you won’t be ready to file by the deadline, file for an extension as early as you can to avoid any issues. 
  1. Don’t Assume- If you are unsure of whether you are eligible for a certain credit or deduction, it is always best to seek advice from a tax professional. 
  1.       Look Ahead- If you are an independent contractor, or if you know that you will owe taxes when it is time to file, looking ahead and saving in preparation can alleviate some of the stress of tax season. 
  1.        Coordinate- If your tax filing depends on others, have these conversations early. If you’re married, will you be filing jointly or separately? If you co-parent, how will you be handling the child tax credit?
  1.       Parents- Your child-related expenses, such as childcare, health insurance, and college tuition, may be deductible. Keep documentation of the amount that you have paid in these areas throughout the year, and share them with your tax professional.
  1.       Students- Your educational expenses may provide deductions for you when it’s time to file. Keep documentation of tuition, fees, book purchases, etc. to share with your tax professional.
  1.       Business Owners- Any expenses used to host, run, supply, or promote your business may be deductible. Speak to a tax professional about your specific business expenses.
  1.       Withholding- Withholding is the process of paying your taxes throughout the year as you receive income. If you did not withhold enough from your income throughout the year, you will owe when you file your taxes. If you withhold too much, you will receive a return of the excess. 
  1. Evaluate Withholding- Are you consistently owing money on your taxes? Are you getting large returns every year but struggling with month-to-month expenses? It may be a good idea to re-evaluate your W4 (tax withholding form). 
  1.       Update With Change- Did you have a major life change this past year? Did you get married? Divorced? Buy a house? Have a child? These are all life changes that may affect the way you file your taxes. 
  1.       Keep Records- The IRS shares that the best practice for keeping tax records is to keep all documentation for at least three years, and even longer in certain cases. Visit irs.gov for more information. 
  1.       Deductions- Know the difference between the standard deduction and itemized deductions in order to determine which will best fit your situation. A tax professional can help you with this! 
  1. Tax Brackets- Part of staying informed is knowing about which tax bracket your income for the year falls within. Visit irs.gov to get the latest information on tax brackets, or ask your tax professional. 
  1.       Donations- donations that you give to approved organizations and charities may be deductible. 
  1. Church Tithes- donations to your church, including those in the form of tithes, may be deductible. 
  1. Take Your Time- Don’t rush through tax preparation. Take your time to avoid errors that may create issues for you with filing your taxes.
  1. Retirement Contributions- Contributions made to eligible retirement funds and accounts may be deductible. Keep record of these contributions to share with your tax professional. 
  1. Think Ahead- You can use your knowledge of your income and expenses to estimate the amount of taxes that you may have to pay or the refund you may receive. The IRS has a “Tax Withholding Estimator” that can help you with your estimation. You can use this knowledge to plan for the upcoming tax season. 
  1. Keep it Separate- Keeping business and personal expenses and records separate can make for a more seamless tax preparation experience. 
  1. Local Taxes- In your planning and preparation, don’t forget to account for local and state taxes. 
  1. Double Check- Don’t assume that you have completed everything perfectly the first time. Before filing, look over everything to ensure that there are no errors that may prevent acceptance. 
  1. Income- The IRS uses your gross income to determine the amount you owe in taxes. This includes any earnings in the form of money, services, property, or goods. 
  1. Death- In the case of a death, a person’s taxes can still be filed for the year in which they died.
  1.  Surviving Partner- A surviving spouse can still file a joint tax return with their deceased partner for the tax year of their death. They can also file for the next two years as a widow(er), if eligible. 
  1. Remarriage- If you remarry in the same year as your spouse’s death, you are not eligible to file a joint return with your deceased spouse. 
  1. Dependents- Children are not the only relatives who may be considered dependents. Adult relatives may also be considered dependents if they meet certain requirements. Stay up-to-date on those requirements by visiting irs.gov and speaking with a tax professional. 
  1. Cash- Don’t forget that cash is still considered income. You should include all cash payments in your yearly income. 
  1. Forms- There are three versions of the form for filing federal income taxes, the 1040EZ, the 1040A, and the 1040. Each form is used for different circumstances, so it is best to research these forms at irs.gov or speak to a tax professional who can help you determine which is best for your needs. 
  1. Child Dependents- You can claim your children as dependents until the age of 24 if they are students and meet certain eligibility requirements. This age limit does not apply to “permanently and totally disabled” children. 
  1.       Self-Employment Net Earnings- Your net earnings are calculated by subtracting your business expenses from your total self-employment income.
  1. It’s the Little Things- Many people only focus on large expenses when they think about deductions for the year, but adding up all of the smaller expenses can make a large impact. 
  1. Previous Taxes- If you spent the year paying back state taxes that you owed for the previous year, you may be eligible for certain deductions or protections for this year. 
  1. Jury Duty- Money that you receive for serving on a jury is considered taxable income, but if you were required to give any of the money you received to your employer, you may be eligible for a deduction. 
  1. Mortgage Points- You may be able to deduct any money that you paid toward points for your mortgage if you bought a house this year. 
  1. Refinancing- You may be able to deduct a fraction of the money that you paid toward points when refinancing your mortgage every year throughout the life of your loan. 
  1. Private Mortgage Insurance- If you meet certain requirements, you may be able to deduct your private mortgage insurance premiums. 
  1. Private School Tuition- If your children are enrolled in a private school, you may be eligible to pay up to $10,000 per year, per child, using a tax-free distribution from a 529 savings plan. 
  1. College Expenses- College students may be eligible for a deduction of up to $2,500 per student, per year, for the costs associated with their studies through the American Opportunity Credit. 
  1. Education at Any Age- The Lifetime Learning credit can be applied to credit a portion of fees associated with higher education at any age. 
  1.       Student Loans- If no longer considered a dependent, students may be eligible to deduct up to $2,500 of the student loan interest paid by their parents. 
  1. Student Loans: Parents- Unfortunately, parents are not eligible to deduct the student loan interest they have paid for their non-dependent children, as they are not liable for the debt 
  1. Medicare- Business owners who still qualify for medicare may be eligible to deduct premiums, supplemental policies, or plan costs. 
  1. Pay throughout the year- Pay taxes through withholding or estimated taxes to avoid penalty fees that could be associated with underpayment of taxes. 
  1. Waiver of Penalty- Tax payers 62 and older can request a waiver to avoid penalty fees with reasonable cause using IRS form 2210. 
  1. Military Reservists- Those in the reserves may be eligible to deduct certain travel expenses, lodging, and meal costs associated with their drills and meetings. 
  1.       Capital Gains- You don’t owe any capital gains taxes on appreciated investments until you realize them by selling.
  1. Renting- If you rent a room in your house, part of all of your housing expenses (including insurance and utilities) can be expense deductions against your rental income.
  1. 1099K- You might get a 1099K for things you sold online; this is not necessarily taxable income to you, since you can reduce that income by the cost of the items you sold.
  1. Backdoor Roth IRA- Think you make too much money to contribute to a Roth IRA? Think again! The Backdoor Roth IRA may work for you. There’s even a mega-backdoor Roth for high-income people with certain 401k plans.
  1.       401k- Always take the 401k match if you have it. Employer contributions to your 401k don’t count against the 19.5k limit.
  1. IRA Contributions- If you change you mind about making an IRA contribution, e.g. your income becomes too high for it to be deductible / allowable, or you just contributed too much, you can remove the money or recharacterize / convert the money to another type of IRA before the tax filing deadline without penalty.
  1. Self-Employed Retirement- Self-employed people have lots of options for retirement accounts, including a solo-401k and a SEP IRA. This can apply even if you have employment retirement savings. The solo-401k allows more contributions but has to be set up in advance.
  1. HSA- You have to have an HSA-eligible HDHP to contribute to an HSA. You can keep prior contributions even after you give up an HDHP, you just can’t contribute more to it. If you change plans mid-year, it might change how much you can contribute to your HSA that year.
  1. Business Meals- As a small business, you can deduct food and drink expenses for you, your employees and clients. To qualify, the meal needs to have a business purpose.
  1. Work Travel- You can write off all expenses related to business travel at tax time. Write offs may include airfare, hotels, rental car expenses, tips, toll fees, dry cleaning and more.
  1. Work Vehicle- If you use your car strictly for work-related purposes, you can write off all costs associated with operating and maintaining it.
  1. Business Insurance- You can deduct the cost of your business insurance on your tax return. However, to qualify, the insurance needs to be both normal and necessary for your business to operate. 
  1. Home Office- You can deduct the cost of your business insurance on your tax return. However, to qualify, the insurance needs to be both normal and necessary for your business to operate. 
  1. Office Supplies- You can write off office supplies that you use for business. This may include printers, paper, pens, ink cartridges, computers and work-related software. 
  1.        Phone and Internet expenses- If using the phone and internet is vital to running your business, you can deduct these expenses. If you use phone and internet for both work and personal reasons, track how much is business use. You can only write off the percentage of their cost that goes toward your business use. 
  1. Business Interest- If you borrow money to fund your business activities, the bank will charge you interest on the loan. Come tax season, you can deduct the interest charged both on business loans and business credit cards.
  1. Depreciation- When you deduct depreciation, you’re writing off the cost of a big-ticket item like a car or machinery. You track depreciation during the useful lifetime of that item instead of deducting the value in a single tax year.
  1. Professional Services- rack professional service fees that are necessary to the functioning of your business. Fees may include legal, accounting and bookkeeping services. You can deduct them all for tax purposes.
  1.       Salaries and Benefits- If you’re a small business owner with employees, you can write off their salaries, benefits and even vacation pay on your tax returns.
  1. Charitable Contributions- You can deduct charitable donations that you make to qualifying organizations. If your business is set up as a sole proprietorship, LLC or partnership, you can claim these expenses on your personal tax forms. If your company is a corporation, you claim charitable donations on your corporate tax return. 
  1.     Education- Any educational expenses you incur to bring value to your business are fully deductible for tax purposes. 
  1.   Energy Efficiency- Upgrades that you make to your home to make it more energy efficient can qualify for tax credits. You can claim 30 percent of the cost of alternative energy equipment for your home.
  1. Foreign-Earned Income- American citizens with businesses based abroad can leave certain foreign income off their tax return. To qualify for the exclusion, your tax home must be based abroad.
  1. Medical Expenses- You can claim both insurance premiums and medical care expenses, including doctor’s fees, prescription drugs and home care.
  1.       Real Estate Taxes- Real estate taxes paid at the state and local levels can be deducted from your income taxes.
  1. Mortgage Interest- You can deduct interest payments made toward some mortgage loans.
  1. Business Bad Debts- Business bad debts are debts that you can’t collect on. This can happen if you’ve lent money to a client that can’t repay the amount. You can reclaim bad debts or worthless debts from the IRS as a tax deductible expense.
  1. Advertising and Promotion- You can fully deduct expenses related to promoting your business.
  1. Client and Employee Entertainment- If you take business clients out, you can deduct the expense. Keep in mind that you must discuss business during the meeting. The entertainment must also take place in a business setting for business purposes.
  1. Startup Expenses- If you launched a new business venture in the latest tax year, you can deduct as much as $5,000 in startup expenses.
  1. Give to family and friends- Using what’s called the annual gift tax exclusion, you can give away $15,000 to as many individuals—kids, grandkids, their spouses—as you’d like with no federal gift tax consequences in 2021.
  1. 529 Education- The money you contribute grows tax free and comes out tax free if used for educational expenses, including a computer.
  1. Side Income- If you have a side income or if you’ve sold stocks at a gain, make sure you’ve withheld enough in income taxes. Typically you should be paying in estimates on a quarterly basis.
  1. Charitable Deductions- You can write off out-of-pocket costs incurred while doing work for a charity. For example, ingredients for dishes you prepare for a nonprofit organization’s soup kitchen and stamps you buy for a school’s fund-raising mailing count as charitable contributions.
  1.       State Sales Taxes- In some cases, even filers who pay state income taxes can come out ahead with the sales tax choice.
  1. Gambling Losses- You may be able to deduct your gambling losses if you itemize, and it’s limited to the amount of gambling winnings you report as taxable income.
  1. Previous Year State Taxes- Remember to include the amount in your state-tax deduction on your federal return, along with state income taxes withheld from your paychecks or paid via quarterly estimated payments during the year.
  1. Recovery Rebate Credit- If you didn’t get a third stimulus check earlier this year, or you didn’t get the full amount, make sure you check out the recovery rebate credit on your 2021 tax return.
  1. Lifetime Learning credit- The credit is worth up to $2,000 a year, based on 20% of up to $10,000 you spend for post-high-school courses that lead to new or improved job skills.
  1.  Self-Employed Medicare Premiums- This deduction is available whether or not you itemize and is not subject to the 7.5% of AGI test that applies to itemized medical expenses.
  1. Previous year’s tax returns- Keeping track of your previous year’s tax returns is a wise idea so that you have that paperwork on you if you ever need it again.
  1.       Retirement at 65- Taxpayers who are 65 and older get a bump up in their standard deduction, lowering their taxes further.
  1. Seek Assistance- Feel overwhelmed by the tax-filing process? Seek help from a tax professional. Contact TaxGiant today!