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Last Updated on August 26, 2023 by Work In My Pajamas
Overpaying the IRS just means that more of your hard-earned money goes to the tax organization who already receives plenty of it!
Getting your taxes right so you can stop overpaying the IRS will put more money into your pocket to grow your savings, business, or simply get that new TV you’ve always wanted. Stop overpaying the IRS by following these simple tips.
Make Your Withholding as Close to the Tax Bill as Possible
How many deductions do you claim on your paycheck? What are your total withholdings? If you’re withholding too much, you’re probably getting a bill when you file your taxes, because a portion of your withholding was supposed to go to the fed. The best thing to do is to match your withholdings to what you’ll owe at the end of the year.
What does your tax bill look like at the end of the year? $1,000? $5,000? This can be an incredibly inconvenient expense, especially if you’re living on a fixed income. Keeping your withholdings to a minimum will ensure you’re paying the right amount in taxes throughout the year to minimize your tax bill at the end of the year.
Don’t Forget Education Tax-Breaks
If you attended college courses last year and paid for tuition, books, housing, and other education-related expenses, you can write off up to $4,000 per year of those expenses on your taxes. This can be an incredible savings opportunity, and help to lessen the blow of expensive college tuition and book costs.
You can also utilize the American Opportunity Tax Credit if you’re working during your first four years of a college education. This can be a break of around $2,500, further reducing your tax burden and making those college expenses a little less impactful on your wallet.
It’s best to take as few loans as possible when you’re seeking higher education, as the expenses that come out of your own pocket are the ones you can write off. Plus, the more loans you take out, the more interest you’ll owe down the road; increasing the cost of those loans over time and making the financial burden even more stressful.
Moving Expenses Can Be Deducted
Did you know that you can actually deduct moving expenses from your taxes? You likely needed some kind of equipment or even hired help to move your household; all of which can be deducted. This applies to those tax-payers who moved for work-related reasons and did not have help covering the moving expenses from their employer. To qualify for this write-off, you must have moved at least 50 miles away from your old home and place of employment, and you must be employed full-time (at least 39 hours per week) with your new employer.
Just moving to a new home or apartment is, unfortunately, not a deductible expense. In this case, you’ll only get a break if you had to move for work and your employer isn’t covering moving costs.
Charitable Donations
Anything you donate to charity (that isn’t in the form of cash) can be deducted on your taxes. That means the check you write to your church every month, the old clothes you sent to Goodwill, or the used toys you donated to your local foster home are all deductible.
It’s not enough to just say you donated these items, however. The IRS will want to see proof that you actually donated what you say you did, which is why it’s always a good idea to have some record of what you donated, when you donated it, and to whom it was donated. Many second-hand stores like Goodwill can offer tax sheets where you can write itemized lists of what you donated for proof of your donations.
Enlist a Professional
If you’re doing your taxes on your own or planning out your finances without any professional help, you’re really setting yourself up for issues down the road. If you aren’t a tax expert, there’s no way you could possibly account for all of the deductions you’re entitled to, and sometimes online programs miss certain things because of user error.
Hiring a professional accountant for your taxes, or at least enlisting the services of a professional tax establishment like H&R Block, will ensure that you’re getting the most out of your tax return and deducting absolutely everything possible from your total tax burden. You’ll want to be certain the numbers are accurate, and that you have all of your paperwork arranged in such a way that it’s easy to locate any information the IRS may need in the event of an audit.
A financial advisor will help you plan out your finances in a way that can help you save for tax time or reduce your overall expenses. Hiring an advisor puts a professional in your corner and a fresh set of eyes on your finances, which is something we could all benefit from now and then. You can find the best financial advisor in Illinois on Carefulcents.com, as well as financial advisors in many other regions to meet your financial needs.
Conclusion
Don’t overpay Uncle Sam; be sure you’re working to get the most out of your taxes and reducing your tax bill as much as possible. Hire a tax professional or accountant, and always be sure to track all of your yearly expenses and taxes you’ve already paid.
