Apr16

Happy New Tax Year!

Posted by Kelly Kirkham

Whew! Tax season is finally over! Rather than dread doing it all again next year, here are some habits that can make your tax season a little bit brighter…

Most think of taxes as a once-a-year pain in the you-know-what, but they don’t have to be. According to Forbes contributor Robert W. Wood, exceptionally tax-averse people have two things: 1. Great habits concerning their taxes and 2. High bank account balances.

To many Americans taxes aren’t really such a big deal, but as you grow older and start investing in various aspects of adult life taxes will quickly become an important part of your life. The Tax Foundation estimates that more money will be spent on taxes in 2015 than on food, clothing and housing combined, totaling an estimated $3.3 trillion dollars to the federal government and an additional $1.5 trillion to state and local government.

This money of course goes towards the services that our government provides, but it’s hard not to gasp at the reference to trillions of dollars (especially if you’ve still got a pot hole down the street which needs addressing). The truth of the matter is that taxes are a part of life and unless you plan on moving to Costa Rica in the next few years, it would be wise to smile and do the best you can. Here are a few simple steps that you can take to become exceptionally tax-averse too…

  1. Pay attention to your 1099 forms: 1099 forms are little tax reports that show up randomly beginning in January. These forms are not only sent to you but to the IRS as well, so make sure you find them and hold on to them.
  2. Know your write-offs: Many people don’t understand tax deductions. Writing off an amount does not make it free. Take the time to learn the pros and cons of tax write-offs.
  3. Keep good records: Don’t play catch up with tax records; it is so much easier to hold on to what you need rather than tracking it down. Robert W. Wood calls it tax-karma – when you have good records you won’t need them, but if you don’t have good tax records you will.
  4. Time matters: It is important to always deal with notices and responses within the time given. In many cases failing to respond can waive some of the rights you would be granted if a timely response was received.
  5. Pick your battles: Don’t be the guy who complained over $5 and ended up owing thousands once the IRS investigated, because it happens.
  6. Know the changes in tax laws: Tax laws are fluid, meaning they are always changing. Make sure you know what you could be facing in the upcoming year by subscribing to a helpful tax blog like TaxFoundation.org.

Until next year! Happy not-tax-season! And just in case this post was a major tax downer, here is an awesome blog explaining tax brackets with Taylor Swift Gifs!

 

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